A federal judge refused today to block a Bronx grand jury investigation that lawyers for Labor Secretary Raymond J. Donovan's construction firm said threatened the company with "imminent" indictment.

U.S. District Court Judge Leonard Sand dismissed protests that the inquiry by Bronx District Attorney Mario Merola was politically motivated and said other complaints also fell short of the concrete evidence needed to justify federal intervention in a state case.

Sand said he was denying the request of Donovan's firm, Schiavone Construction Co. of Secaucus, N.J., for a temporary restraining order and suggested that the company look for other ways to protect its interests.

Prosecutors from Merola's office said the investigation has been under way for more than a year. They described the probe as the outgrowth of an unsolved 1978 murder of a reputed Mafia soldier, Salvatore (Sally Blind) Frascone, in the south Bronx.

They said the investigation led them to examine Schiavone Construction's dealings with William Masselli, another reputed Mafia member, who reportedly had pushed aside a friend of Frascone to establish himself as a Schiavone subcontractor.

Stephen Bookin, head of the Bronx district attorney's felony bureau, has voiced suspicions that about $8 million allegedly paid to Masselli's company as a minority subcontractor stemmed from inflated statements and false reports that Schiavone officials made to the New York Transit Authority.

Another Bronx prosecutor said at a hearing today that the possible charges include grand larceny, falsifying business records, perjury and filing false records with a public agency.

Theodore Geiser, chief attorney for Schiavone Construction (SCC) and seven company executives who have been invited to testify before the Bronx grand jury, said he was not inclined to appeal the judge's ruling.

"I have a great many other battles to fight," he told reporters.

Prosecutors from Merola's office said they were waiting to find out whether Geiser's clients, including SCC President Ronald Schiavone, were willing to waive immunity from prosecution and testify before the grand jury.

Donovan has also been asked to testify. His lawyer, William O. Bittman of Washington, told reporters that he has "not been advised Donovan is a target" of the inquiry, but declined further comment.

Geiser, however, said that "if were the secretary, I would regard myself as a potential target. I certainly regard my clients as potential targets."

A second Donovan lawyer, Dean Burch, said Donovan is willing to testify without immunity from prosecution if necessary.

In seeking a federal court order, Geiser contended that the threatened prosecution constituted "harassment" in light of the lengthy 1982 investigations of alleged ties between Donovan and organized crime by special prosecutor Leon Silverman. He found "insufficient credible evidence" to warrant Donovan's prosecution for any federal crime.

Noting that the labor secretary still "has a beneficial ownership interest" in Schiavone Construction, Geiser said "the threatened criminal prosecution in the Bronx promises to be an embarrassment to the Republican administration on the eve of the presidential election" Nov. 6.

He also maintained that Merola's investigation involved a disputed interpretation of federal regulations governing payments to minority business contractors.

Despite all that, "as the prosecutor must surely know," Geiser continued in a memo to the court, "the plaintiffs might well not be able to obtain a dismissal of the indictment, due to its timing, until after the presidential election."

Sand rejected the complaints of "political motivation" as "conclusory."

Geiser had complained that Schiavone Construction would face "irreparable injury" if the investigation continued, saying that indictments could cause state agencies in New York and New Jersey to prohibit the company from bidding on public contracts.

The judge held that the danger was too remote at this point and that, if it materialized, Geiser could seek an injunction in state courts against the agencies involved.