Frank J. DeFrancis, a colorful international lawyer and race-track owner who is credited with revitalizing Maryland's business climate since taking charge of the Department of Economic and Community Development a year ago, is on the verge of resigning his cabinet post, State House sources said today.

DeFrancis, who is said to be very close to buying Laurel Race Course, will leave rather than subject himself and Gov. Harry Hughes to a public discussion of whether such a purchase represents a conflict of interest, the sources said.

The 57-year-old DeFrancis, who already owns a majority share of Freestate Raceway, a harness track in Laurel, may announce his resignation in a few days once the Laurel purchase is completed, sources said. DeFrancis, who sources said agonized over the decision for some time, could not be reached for comment.

DeFrancis had previously said that if he is successful in purchasing the thoroughbred racing facility, he would seek an opinion from the State Ethics Commission on the propriety of his ownership. When he was appointed to his $62,000-a-year-job in Hughes' cabinet last December, DeFrancis relinquished day-to-day control of Freestate, although he retained his 60 percent share of the track.

But the prospect of continued questions about the ethics of owning two key facilities in one of the state's largest industries -- while heading an agency charged with attracting and keeping businesses in the state -- has apparently persuaded DeFrancis to relinquish his post.

"He feels it's in the best interests of everyone that he leave," said one source familiar with DeFrancis' thinking in recent days. "He doesn't want to personally go through the aggravation or cause embarrassment to anyone."

Though DeFrancis has had a number of high-profile successes, including the recent announcement that a new supercomputer center would have its headquarters in Prince George's County, it is as much his style as what he has accomplished that has pleased politicians and businessmen.

"He's been a dynamic secretary," said Senate President Melvin A. Steinberg. "In a short period of time he has turned around the weak sister of the departments into one of the most vital in the state of Maryland." Steinberg gave DeFrancis credit for reversing the state's reputation as having an unfriendly business climate and said it would be a "shame" to lose him.

Lou Panos, Hughes' press secretary, would not confirm that DeFrancis will resign. "The governor has said that the proposed purchase of Laurel is subject to the approval of the stockholders," Panos said, "and unless and until that happens he is saying nothing. If it does happen, he and the secretary plan to make a joint announcement."

Hughes told The Baltimore Sun in October that the purchase of Laurel by DeFrancis would not "in itself" constitute a conflict of interest, and said he wanted the secretary to remain in his cabinet indefinitely.

At the time of his appointment, the ethics commission ruled that DeFrancis' ownership of Freestate was not a conflict, since the department he heads does not regulate the racing industry, which is controlled by the Department of Licensing and Regulation.

In his brief tenure as secretary of economic and community development, DeFrancis has used the same promotional flair that reinvigorated Freestate to transform a widely criticized department into one that is winning praise from both the Maryland business community and state legislators.

"He's earned a super reputation," said Robert Keller, executive director of the Greater Baltimore Committee. "He's a go-getter, a deal-maker. He has a high confidence level in the business community. He talks the language of business and cuts through a lot of red tape."

But DeFrancis surely would have encountered a storm of criticism if he tried to stay in his post while owning two of the state's race tracks.

The General Assembly, which convenes next month, is expected to take up a number of proposals to rescue the state's faltering thoroughbred racing industry. The industry itself has proposed some sweeping changes, including drastically reducing the state's taxes on bets to allow tracks to increase purses and improve facilities.

If DeFrancis does buy Laurel with his partners, Bob and Tommy Manfuso, the purchase would give them a half share of Bowie Race Course. The current Laurel owner this year bought Bowie in conjunction with the owners of the state's third major track, Pimlico in Baltimore.