May 6 (Bloomberg) -- Ohio Attorney General Marc Dann, who is investigating more than a dozen mortgage companies for possible violations in connection to the subprime crisis, resisted calls to resign after admitting an affair with a member of his staff.

``I am in the office, have rolled up my sleeves and am working on behalf of the people of the state of Ohio,'' Dann said in an e-mail to his staff posted on his Web site yesterday. ``I think there is a great chance that we can continue to do great work for the people of the state. I know that this is difficult, and I am truly sorry to have put all of you in this position.''

Governor Ted Strickland, U.S. Senator Sherrod Brown and six fellow state Democrats have urged Dann to resign because his actions ``irreparably harmed'' his ability to serve, according to a copy of the letter posted on Strickland's Web site. Dann told the governor he won't step down, a statement posted on the attorney general's Web site said.

Strickland said Democratic state representatives will introduce a resolution seeking Dann's impeachment if he doesn't resign. It would be the first such action for a state official in the 205-year history of the state, the Columbus Dispatch reported.

Dann, 46, said last week that he had a ``romantic relationship'' with a staff member at a ``difficult time'' in his marriage. He apologized to his family and employees, saying his ``errors in judgment have allowed the creation of a sideshow that has played out in the news.'' He didn't name the co-worker.

Internal Investigation

The attorney general's admission came after an internal investigation into sexual harassment complaints made by workers in his office led to the firing of two staff members and the resignation of a third last week.

The harassment investigation was triggered by an April 6 Dispatch story that outlined complaints made by two of Dann's employees, the newspaper reported today.

Dann, who is married with three children, declined to identify the woman with whom he had an affair, although he confirmed that his former scheduler, Jessica Utovich, 28, sometimes spent the night at his condominium in the Dublin area, the Dispatch said. Utovich resigned last week without giving a reason, the newspaper reported.

Wall Street Targeted

Since taking office in January 2007, Dann has targeted Wall Street lending firms for the subprime mortgage crisis, likening them to armed robbers because, he said, bond sales allowed consumers to get mortgages they couldn't afford. Ohio had the highest percentage of loans in the foreclosure process in the fourth quarter, according to the Mortgage Bankers Assocation.

Dann on Jan. 18 sued Freddie Mac, the second-largest U.S. mortgage-finance company, on behalf of the Ohio Public Employees Retirement System for allegedly ``bilking investors'' in the fund of $27.2 million and ``fueling the foreclosure crisis.''

In February, Dann said he may also sue Fannie Mae, the largest U.S. mortgage-finance company, alleging that it failed to tell shareholders about the extent of its holdings in subprime home loans, or those held by borrowers with poor credit.

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net.

Last Updated: May 6, 2008 11:32 EDT