Study drug became commercially available.

RATIONALE: Drugs used in chemotherapy use different ways to stop tumor cells from dividing so they stop growing or die. Tretinoin may help hematologic cancer cells develop into normal white blood cells.

PURPOSE: Phase I/II trial to study the effectiveness of arsenic trioxide with or without tretinoin in treating patients who have hematologic cancer that has not responded to previous therapy.

This is a dose escalation and efficacy study of arsenic trioxide. In the efficacy study, patients are stratified according to diagnosis (acute myelogenous leukemia vs acute lymphocytic leukemia vs myelodysplastic syndrome vs multiple myeloma vs non-Hodgkin's lymphoma and Hodgkin's disease). Phase I: Patients receive arsenic trioxide IV over 2 hours daily for 28 days. Treatment repeats every 42-59 days in the absence of disease progression or unacceptable toxicity. Patients who achieve complete remission (CR) or partial remission (PR) receive up to 4 courses. Patients who fail to achieve CR or PR or who experience disease progression may receive arsenic trioxide and tretinoin daily for 28 days every 42-59 days for up to 7 courses. Patients who fail to achieve CR or PR or experience disease progression with arsenic trioxide and tretinoin are removed from study. Cohorts of 3-6 patients receive escalating doses of arsenic trioxide until the maximum tolerated dose (MTD) is determined. The MTD is defined as the dose preceding that at which 2 of 6 patients experience dose limiting toxicities. Phase II: Patients receive the MTD of arsenic trioxide as in phase I for up to 7 courses. Patients who fail to achieve CR or PR after 3 courses or experience disease progression are either taken off study or treated with arsenic trioxide and tretinoin as in phase I. Patients are followed monthly for 6 months, and then every 3 months for 18 months.

DISEASE CHARACTERISTICS: Patients with any of the following diagnoses: Acute lymphocytic leukemia OR acute myeloid leukemia Failed to achieve complete remission (CR) with induction chemotherapy OR Relapsed within one year of initial CR OR Relapsed after autologous or allogeneic transplant OR Any subsequent relapse OR Refractory following relapse CR2 or more (phase I only) Blastic phase chronic myelogenous leukemia Prior therapy allowed Myelodysplastic syndrome, including the following: Refractory anemia with excess blasts (RAEB) OR RAEB in transformation (high intermediate or high risk only) Relapsed after transplant CR2 or more (phase I only) Non-Hodgkin's lymphoma OR Hodgkin's disease Newly diagnosed or in first relapse and failed to achieve CR or partial remission after induction or salvage chemotherapy OR Second or later relapse OR Relapsed after transplant No disease that can be encompassed in a standard radiation port No asymptomatic, minimally symptomatic, or low grade lymphoma Multiple myeloma Symptomatic, progressive, or recurrent disease after treatment with alkylating agents, high dose corticosteroids, or anthracyclines OR Relapsed following transplant Not eligible for autologous or allogeneic transplant A new classification scheme for adult non-Hodgkin's lymphoma has been adopted by PDQ. The terminology of "indolent" or "aggressive" lymphoma will replace the former terminology of "low", "intermediate", or "high" grade lymphoma. However, this protocol uses the former terminology.

PATIENT CHARACTERISTICS: Age: 15 and over Performance status: ECOG 0-2 Life expectancy: Not specified Hematopoietic: Absolute neutrophil count at least 500/mm3* Platelet count at least 50,000/mm3* *Unless caused by marrow infiltration by tumor No congenital bleeding disorder Hepatic: Bilirubin less than 2 times upper limit of normal (ULN) SGOT less than 3 times ULN Renal: Creatinine clearance greater than 25 mL/min Cardiovascular: No myocardial infarction, stroke, or unstable angina within the past 12 months No uncompensated congestive heart failure Left ventricular ejection fraction at least 40% Other: No active infection HIV negative HTLV I/II negative Not pregnant Fertile patients must use effective contraception during and for 2 years following study

PRIOR CONCURRENT THERAPY: Biologic therapy: See Disease Characteristics Chemotherapy: See Disease Characteristics Prior hydroxyurea allowed Endocrine therapy: See Disease Characteristics Radiotherapy: See Disease Characteristics Surgery: Not specified Other: At least 3 weeks since prior antileukemic therapy (except leukapheresis)