INDUCTION CHEMOTHERAPY: Patients receive cytarabine intrathecally (IT) on day 1; daunorubicin hydrochloride intravenously (IV) over 10-15 minutes on days 1, 8, 15, and 22; vincristine sulfate IV on days 1, 8, 15, and 22; dexamethasone orally (PO) daily on days 1-7 (and 15-21 for patients age < 55 years only); methotrexate IT on day 14; pegaspargase intramuscularly (IM) or IV on day 18 (patients age =< 55 years); and CD20 positive patients may optionally receive rituximab IV on day 8 and 15. Beginning on day 29, patients with absolute neutrophil count (ANC) >= 0.75 x 10^9/L and platelets > 75 x 10^9/L (patients with delayed hematologic recovery) (patients with residual disease that is delaying count begin treatment immediately) receive cyclophosphamide IV over 30 minutes on days 1 and 29, cytarabine IV over 30 minutes or subcutaneously (SC) on days 1-4, 8-11, 29-32, and 36-39, mercaptopurine PO on days 1-14, 29-42, pegaspargase IM or IV on day 15 (patients age < 55 years), patients receiving treatment for central nervous system (CNS) 2 or 3 leukemia in course 1 receive methotrexate IT on days 1, 8, 15, and 22, and CD20 positive patients may optionally receive rituximab IV on days 8 and 15.