Two Montgomery County precious metal dealers and two of their employes have been charged with theft and conspiracy to commit theft following a ten-week undercover investigation that alleges they knowingly bought stolen goods, police said yesterday.

The arrests Friday night at the Central Maryland Coin Store at 223 E. Diamond Ave. in Gaithersburg and the Maryland Coin Exchange at 8610 Georgia Ave. in Silver Spring were the first involving precious metal dealers since the county enacted an ordinance last December that requires buyers to hold purchased merchandise for 15 days.

"Most dealers are handing in the forms. The legislation helped because dealers now have to hold onto items for 15 days. Those forms are a treasure trove of information," said police spokesman Nancy Moses. "There are more arrests anticipated . . . this is just the tip of the iceberg."

Surveillance teams of detectives allegedly observed known criminals as they entered both stores with merchandise and then left empty-handed. Investigative sources also said that statements were taken from individuals who claimed to have overheard store officials talking about stolen goods.

The investigation was performed in conjunction with the State's Attorney's office. "I am issuing a warning to the other precious metal dealers that we are monitoring their activities very closely," State's Attorney Andrew L. Sonner said yesterday.

"The illegal activities of certain dealers undoubtedly has assisted burglars in Montgomery County who last year broke into 5,800 homes. (Montgomery County Police) Chief Bernard D. Crooke and I are going to do everything in our power to put a stop to this," he said.

Authorities charged Cleveland L. Hagey Jr., 38, who resides on Arch Road in Mount Airy and owns the Central Maryland Coin Store, with theft. Michael O'Higgins, 24, a resident of Tynwick Terrace in Silver Spring and owner of the Maryland Coin Exchange, was charged with theft and conspiracy to commit theft, according to police.

Two of O'Higgins' employes were also charged with conspiracy to commit theft, police said. They were identified as Philip W. Davis, 25, of Lanier Place in Northwest Washington, and 35-year-old Kenneth E. Riffle of 49th Street in College Park. All four men were released on personal bonds, said police.

But three of the suspects yesterday called themselves "perfectly honest individuals" who were allegedly rebuffed when they tried to cooperate with police in order to avoid receiving stolen property.

"We've asked the police what we should do in these situations and they've given us no information whatsoever. They never give out hot sheets on stolen property.We've complied with the new ordinance. There's no way that I could know if something is stolen," said O'Higgins.

"Nobody really knows for certain what has been stolen," said Davis. "They (police) ask you to be the judge and the jury on whether something is stolen."

"The problem is that you have 100 people coming through your business. There's no way for us to know, and the information flows one way. They give us no guidelines on how to screen people," said Riffle.

The four are scheduled for court appearances on Mar. 16.