A D.C. police department internal investigation into whether police officers overlooked illegal gambling at a carnival in Northeast Washington last April has been completed and turned over to the U.S. Attorney's office here, according to Police Chief Maurice T. Turner Jr.

The internal affairs division report centers on allegations that police officials at the 6th Police District allowed off-duty officers to work at the carnival and ordered on-duty officers to provide security, sources said.

Turner said he has not read the report and does not know what it says. He declined further comment.

Officials in the U.S. Attorney's office also declined comment. A source in the U.S. Attorney's office said the matter "probably" will be referred to a grand jury, but that such a referral is routine and that referring the case does not suggest prosecutors believe the allegations have merit.

The internal investigation focused on the role played by Capt. Nelson Grillo, a 14-year veteran of the department, who allegedly was present at the fair, which was held to raise money for the legal defense of Officer James Hairston, who is under indictment for manslaughter, the sources said.

Grillo declined comment yesterday.

Police sources said that sergeants and lieutenants from the 6th Police District, as well as Grillo, were present at the fair, which was held in a park off Kenilworth Avenue NE. Other officers present were under the impression that the police officials had granted the fair's organizers a special exemption to operate games of fortune at the fair, at which bets were placed for cash prizes, the sources said. Such games are normally illegal in the District.

Some off-duty 6th District officers worked at concession stands at the fair and some at games of fortune, sources said.

One 6th District officer who objected to being present during the gambling got into an argument with a sergeant who ordered him to accompany fair officials taking money from the games to a counting room, according to Gary Hankins, chairman of the Fraternal Order of Police's labor committee.

Sixth District officials gave the officer an official reprimand for failing to follow the sergeant's order, Hankins said. "He was uncomfortable about being there," Hankins said. Hankins added that some officers are afraid that the officer will be the only one punished, and that the police officials present will go unpunished.

"There's a widely held perception among the rank and file that there is a double standard of discipline," Hankins said.

Hairston, a 14-year veteran of the force, was placed on administrative leave earlier this year after his indictment for manslaughter in connection with the shooting of Adam Tyree Boyd outside a Northeast food market in October 1981. Hairston was working off-duty at the time he shot Boyd after a scuffle, authorities said.

The Fraternal Order of Police has offered Hairston the services of the law firm the union has contracted with to handle police officers' legal problems. But Hairston does not want that firm to represent him and demanded unsuccessfully that the union pay for a lawyer of his choice.