George Washington University officials have sent to the U.S. Attorney's office documents concerning the possible misuse of funds at the school's library, involving expenditure of more than $70,000 for books that were not received.

The money has been returned to GWU, university officials said. But they decided, nevertheless, to send the matter to federal prosecutors "for possible action."

GWU officials sent the material to prosecutors last week after an audit by a private firm and subsequent internal investigations led to the allegation that the more than $70,000 had ended up in a bank account of James Alsip, the former head librarian who resigned in April when questions arose about the funds.

A federal prosecutor confirmed yesterday that he is examining the matter. An attorney representing Alsip confirmed that a sum of money had been returned to the school and said he believed the allegations amounted to "a big mistake."

In a memorandum to university deans, vice presidents and other officials dated Aug. 3, GWU President Lloyd Elliott stated that "Serious irregularities, including payment in excess of $70,000 for books not received, were discovered" in the audit and subsequent investigations. "This money was refunded, by a New York book dealer, directly to Mr. Alsip and deposited in a personal account," Elliott wrote.

University officials said that when a GWU attorney raised the matter of the $70,000 with Alsip's lawyer, Alsip's wife wrote a check to the university covering the $70,000.

Assistant U.S. Attorney Harry R. Benner yesterday confirmed that his office had received the results of GWU's investigation and that he was looking into it. Benner added that "At this point we have consulted with the FBI, but we haven't asked them to do anything yet."

Alsip has been unavailable for comment.

Richard Goldman, Alsip's New York-based attorney, said he thinks that GWU officials should have dropped the matter after they got their money back.

"His fault was not avarice because he did not spend it, or enjoy it or keep it," Goldman said of Alsip. He said that the money was given back because "The family unanimously decided they didn't want any part of money that might not be theirs," and added, "We don't really know exactly what happened."

He said Alsip "had not only impeccable credentials but he was a leader in his industry."

University officials, who had uniform praise for Alsip's performance as librarian over the past four years, said that they began looking into Alsip's use of library funds when a library employe came to them with suspicions during the final week of April. Alsip's resignation was accepted days later and an audit was conducted by the private firm of Price Waterhouse, university sources said.

That audit and subsequent digging allegedly showed that $70,000 in university funds had been paid to a New York book dealer over a period of several months for books that were never delivered to the library, according to a university official.

When university representatives contacted the book dealer, according to the official, the dealer told them that Alsip had said not to ship the books and to refund the money to "University Library Associates."

University officials said they came up with a canceled check from the book dealer endorsed with Alsip's name. GWU officials and the federal prosecutor have refused to divulge the New York book dealer's name.

"It is common if not usual to prepay for some kinds of books and therefore to get the money back if you are going to use it for some other kind of book," Goldman said. "I think one problem is that universities and libraries have somewhat informal practices."

Goldman added, "In this specific case it was more than possible that he intended to divert the money into a new fiscal year rather than let it go unspent forever because the year was running out. I think it could be a big mistake."