A federal grand jury in Alexandria is looking into a possible conflict of interest involving two part-time Fauquier County prosecutors who are also the private attorneys for top executives in the Virginia-based Arlie Foundation.

The prosecutors, Fauquier County Commonwealth's Attorney Charles B. Foley and his assistant, Roger A. Inger, are representing the Arlie officials in their appearances before a new federal grand jury investigating alleged contract fraud within the foundation. Airlie's founder, Dr. Murdock Head, is also under investigation.

At the same time, the Fauquier prosecutors are spearheading their own county investigation into alleged embezzlement and other misconduct on the part of former Airlie officials who figured prominently in Head's conviction last October for conspiring to bribe two U.S. congressmen.

A key government witness in that trial, former Airlie controller Robert T. Curtis, was indicted by a Fauquier County grand jury Monday on charges of embezzling $735 from the foundation in August 1975.

Foley said yesterday he will ask the Virginia State Bar Association's legal ethics committee for an opinion on whether his public and private roles in the affairs of current and former Airlie Foundation members constitute a conflict of interest.

Denying any unethical conduct on his part, Foley said he had already asked the bar association's counsel about the matter and had been told that there did not appear to be any conflict of interest involved.

Foley said no conflict exists because the county investigation would involve foundation activities that occured in 1975 and earlier while his current foundation work involves more recent maters. He said he agreed to represent the foundation members before a new federal Airlie probe began.

Foley conceded that his unusual relationship to the Airlie case did present an awkward situation that had prompted suggestions that the Fauquier County probe might be used to intimidate key witnesses in the federal prosecution of Head and others.

"That's what the prosecutors in Alexandria are trying to get at," said Foley, who spent yesterday with his clients at the federal courthouse in Alexandria.

Frank Kavanaugh, who succeeded Head as the foundation's executive director following Head's convicton, is one of the Airlie officials being represented by Foley. He said yesterday that he and other foundation members are being asked numerous questions about their legal arrangements with the Fauquier County prosecutors, and he repeated earlier complaints that the new federal investigation amounts to a "personal vendetta" against Head.

"They're just determined to find something," said Kavanaugh. "I think they're off on some wild track."

Kavanaugh said he and six other Airlie officials went before the grand jury in Alexandria on Tuesday and that he refused to answer any questions about the foundation or its legal defense arrangements.

"But I didn't just take the Fifth [amendment against self-incrimination]," he said. "I got to tell the grand jury the reasons. I said the federal prosecutors had lied to me and that they were trying to squeeze people and threaten them into cooperating."

Kavanaugh speculated that the prosecutors, assistant U.S. attorneys Theodore Greenberg and Joseph Fisher, had initiated a new investigation into foundation activities as a hedge against the possibility that Head's conviction -- now being appealed -- might be overturned or a retrial ordered.

Greenberg declined to comment yesterday on the case or Kavanaugh's criticisms. He said he had never raised any conflict of interest concerns with Foley nor asked him to refer the matter to the state bar for review.