The attorney for a state-funded fitness program trying to bring the U.S. Olympic Festival to Maryland denied charges by the state attorney general that the program has misused more than $370,000 in state money, and said it will fight a court order forcing it into receivership.

Meanwhile, the state health department said yesterday that it is investigating "serious problems" in the operation of a related program, the Maryland State Games Project.

In court documents filed in Howard County Circuit Court on Friday, the Maryland Attorney General's Office accuses the Maryland State Games Foundation, a private corporation, of being unable to properly account for more than $370,000 in state funds. Circuit Judge Cornelius F. Sybert Jr. immediately appointed a receiver, a third party who will control the organization until the dispute is settled.

The foundation, which raised money for the Maryland State Games and other sports and fitness programs, received state grants totaling $490,000 from May 1989 to last month. But $371,933.86 either could not be properly accounted for or had been used for purposes not allowed by the state, according to court papers.

F. Todd Taylor Jr., attorney for the foundation, said yesterday that the organization will fight the receivership in court within the next week.

"I think it's an overreaction," Taylor said. "We're going to deny most of the charges. "

Taylor said that the foundation had not used funds improperly and had not failed to keep proper records. "They've got to prove that," he said, "and they're going to have a tough time proving that."

Two state health department officials involved with the foundation were fired last week because of the allegations. John Staubitz, deputy for operations, resigned Friday after his ouster was sought by health department Secretary Adele Wilzack. Jim Narron, director of special projects and chairman of the Maryland State Games, also was dismissed.

Narron, who also served as chairman of the board of directors of the private Maryland State Games Foundation, "engaged in repeated expenditures for questionable, improper and potentially illegal purposes," according to court papers.

Narron denied all allegations yesterday, and said that "there've been no secrets about what's been going on here whatsoever . . . . We get grants for programs, and the money is spent for those programs. There was nothing improper about any of our expenditures."

He acknowledged that the foundation "didn't have an elaborate bookkeeping system," in which secretaries kept track of the organization's ledgers. But he said that state health department officials "never said, 'Hey, we don't like what you're doing.' No one ever questioned me at all."

He said the foundation recently had hired an office manager to take care of bookkeeping chores.

Narron also said that it is not unusual for the foundation to be low on funds late in the year. "We're a nonprofit organization," he said. "This is usually the time of year to start going out to get money for programs."

The Maryland State Games, held the past five years, annually attract top amateur athletes from around the state. Maryland officials had hoped that the games would make the state a more viable candidate to become a host for the U.S. Olympic Festival, which prepares athletes for spots on the U.S. Olympic team.

Staubitz headed the state's bid for the 10-day festival, and Narron was chairman of the State Games.

Wilzack has refused to comment on the investigation of the Maryland State Games Foundation. The court papers do not specify how the money was allegedly misused.

In a statement released yesterday, she said that the department had launched an investigation into the State Games Project, a unit designed to help promote sports programs and physical fitness. Unlike the foundation, the State Games Project is a formal part of state government.

Gov. William Donald Schaefer has asked the Attorney General's Office to proceed "with any investigations it deems appropriate."

The statement did not detail specific allegations against the project.