The Lacaze-Gardner School of Business faced new setbacks yesterday as all remaining faculty members at the downtown campus said they had been fired over the weekend and the U.S. Office of Education announced it has cut off all federal student aid funds to the school.

The school, which received more than $2 million in federal student aid funds last year, is under investigation by the U.S. Office of Education and the FBI for alleged abuse of federal student financial aid programs.

About 100 students arrived yesterday for morning classes at the school, at 710 14th St. NW, only to find a notice that the school is "closed until further notice."

At a press conference, Frizel Askew, president of the Association of Lacaze-Gardner Instructors, said the entire faculty of 21 teachers had been telephoned over the weekend by a school spokesman and told that they had been dismissed. The teachers were asked to pick up their final paychecks at the school yesterday, Askew said.

He charged that the mass firings are an attempt by Daniel Grossman, the school's owner, to halt a faculty union in its developmental stages. Askew said the teachers were scheduled to have a collective bargaining agent election on Wednesday.

Askew said that since last June, when Grossman fired 15 teachers - a fourth of the faculty at that time - the faculty had gradually dwindled to the 21 fired yesterday.

In August, several faculty members who helped frame the teachers union were fired, Asked said.

Judy denny, director of eligibility and compliance at the U.S. Bureau of Studen Financial Assistance, said the agency has cut off payment of nearly $2 million in federal student financial aid that had been allocated to Lacaze-Gardner under a special emergency regulation.

Leo L. Kornfeld, deputy commissioner of the bureau of student financial assistance, wrote to Grossman last Thursday that the school would receive no further funds through the Basic Education Opportunity Grant, the Supplemental Education Opportunity Grant, National Direct Student Loan, College Work Study, or Guaranteed Student Loan program.

Kornfeld said the funds initially will be cut off for 30 days. If the Office of Education initiates action to suspend the school from the federal student aid program during that period, the funds will remaincut off. If no legal action is taken against the school, the funds will be restored.

Denny estimated that Lacaze-Gardner Business School and its technical division, Lacaze Academy - both owned by Grossman - have received about $800,000 thus far of the total $1.7 million in student aid allotted to the school this year.

The Lacaze-Gardner School's enrollment is 900 students drawn primarily from low-income inner-city families.

More than 70 percent of all students who attend the school pay a portion of their tuition - $2,900 for a nine-week course - with federal funds, according to Grossman. The U.S. office of Education estimates that Lacaze-Gardner has a dropout rate of about 80 percent.

James Aquino, director of the Lacaze-Gardner School at 640 University Boulevard in Langley Park, said Grossman has told him to continue regular operations at the school, which has 180 full-time and part-time students and 13 full- and Part-time teachers.

Peter peterson, director of Lacaze-Gardner in Falls Church at 7202 Arlington Boulevard, said he has not heard from Grossmans office. But he said he will continue normal operations until he is told to do otherwise. The Falls Church school have five full-time faculty members and 125 students, Peterson said!

A spokesman for Grossman said he would have to comment about the status of the two suburban schools. He also would not comment about whether the downtown school is expected to resume operation.

Goldie Wilbon, coordinator of student government at Lacaze-Gardner, said she and three other students met with Grossman for two hours yesterday and reached a "reasonable" agreement.

Wilbon, who said she enrolled at Lacaze-Gardner on October 4, said she would have no further comment on the nature of the agreement. But she said the agreement gave her hope that downtown classes will resume eventually.

Donald McKenzie, 24, who was among the teachers fired last weekend, said he earned $8,000 at Lacaze-Gardner, where he taught reading, English and math for a year.

"I really liked working with the students," McKenzie said. "We had a certain freedom as teachers. The administration made a million rules, but never enforced them. All they wanted to do was get the kids in school. From then on they expected us to just performed a babysetting service."