DISEASE CHARACTERISTICS: Relapsed or refractory chronic lymphocytic leukemia (CLL) Previously treated with alkylating agent Refractory or intolerant to fludarabine as defined by: Progressive disease during treatment with fludarabine Stable disease (no partial or complete response) after at least 2 courses of fludarabine Relapse or progressive disease within 6 months of treatment with fludarabine Autoimmune hemolytic anemia or idiopathic thrombocytopenia concurrent with or within 1 month after completion of fludarabine Grade 2 pulmonary toxicity or neurotoxicity that would preclude further treatment with fludarabine OR Progressive B-cell CLL as defined by at least 1 of the following: Hemoglobin less than 11 g/dL, or progressive decline Platelet count no greater than 100,000/mm3, or progressive decline Massive (greater than 6 cm below costal margin) or progressive splenomegaly Massive lymph nodes or clusters or progressive lymphadenopathy At least 10% weight loss in past 6 months Fatigue grade 2-3 Fever (greater than 100.5 F) or night sweats for greater than 2 weeks without evidence of infection Progressive lymphocytosis greater than 50% over 2 month period, or anticipated doubling time less than 6 months Lymphocyte count greater than 100,000/mm3 No uncontrolled autoimmune hemolytic anemia or idiopathic thrombocytopenia No other uncontrolled immune phenomena related to CLL No CNS metastases

PATIENT CHARACTERISTICS: Age: 12 and over Performance status: Zubrod 0-2 Life expectancy: At least 2 years Hematopoietic: See Disease Characteristics Hepatic: Bilirubin no greater than 1.5 times upper limit of normal (ULN) (unless due to Gilbert's disease or direct CLL infiltration of liver) SGOT or SGPT no greater than 2.5 times ULN (unless due to direct CLL infiltration of liver) No hepatic disease that would preclude study Renal: Creatinine no greater than 1.5 times ULN OR Creatinine clearance at least 60 mL/min Cardiovascular: No unstable angina pectoris No cardiac arrhythmia No prior grade III or IV New York Heart Association cardiac problem No cardiovascular disease that would preclude study Other: No prior grand mal seizures (infantile febrile seizures allowed) No other active malignancy No other uncontrolled concurrent medical problem No active uncontrolled infection No prior hypersensitivity to arsenic trioxide or related drugs No neurologic, endocrine, or other systemic disease that would preclude study No other condition that would preclude study compliance Not pregnant or nursing Negative pregnancy test Fertile patients must use effective contraception

PRIOR CONCURRENT THERAPY: Biologic therapy: No concurrent stem cell transplant Chemotherapy: See Disease Characteristics At least 14 days since prior chemotherapy and recovered (unless evidence of disease progression) No concurrent chemotherapy No prior arsenic treatment Endocrine therapy: No concurrent steroidal or hormonal therapy for cancer Steroids for adrenal failures and hormones for nondisease conditions allowed Radiotherapy: At least 14 days since prior radiotherapy and recovered (unless evidence of disease progression) No concurrent radiotherapy Other: At least 14 days since other investigational agents and recovered (unless evidence of disease progression) No concurrent other investigational agents