Federal prosecutors have begun an investigation into troubled mortgage guarantor Fannie Mae’s bookkeeping practices, according to documents filed with the Securities and Exchange Commission yesterday.

Moreover, Fannie Mae acknowledged in the filing that the Attorney General of Ohio has begun an investigation on behalf of Ohio public pension funds that have investments in the company.

A spokeswoman from the Ohio Attorney general’s office, Kim Norris, did not return a call.

Fannie Mae’s 8-K filing also said eight separate class-action lawsuits are being prepared against the company.

The news comes on the heels of an announcement by the SEC last week that it is investigating Fannie Mae’s accounting practices.

The latest announcements are another step in a process at the end of which much of Fannie Mae’s senior management will likely be forced out of the company, said Portales Partners Mark Agah, a Wall Street analyst who placed a “sell” rating on Fannie Mae’s stock in January.

He was the first to sound an alarm over Fannie Mae’s accounting and is still the only analyst who is bearish on Fannie Mae.

Portales Partners is an independent research boutique that sells its research to institutional money-management clients.

Mr. Agah added that after former Fannie Mae accountant, Roger Barnes, testified last week that the company use intimidation tactics against him when he complained internally about its accounting, a federal investigation was inevitable.

“When the dust settles on this one, the big moment will have been Roger Barnes,” Mr. Agah said. “He provided the roadmap for all federal and state investigators.”

The testimony of Mr. Barnes alleged “financial improprieties” in the way Fannie Mae accounted for earnings. Mr. Barnes alleged that Fannie Mae recognized income improperly to hit publicly stated earnings targets.

He said he had repeatedly attempted to warn senior management – including sending the company’s chief executive, Franklin Raines, and the chief financial officer, Timothy Howard, a lengthy e-mail – but that he was ignored. He described the atmosphere at Fannie Mae as “plagued by a corporate culture that uses threats, intimidation, and reprisal.”

A Fannie Mae’s spokeswoman, Janice Smith, declined comment.

Mr. Agah said that he has reiterated his sell rating on the company’s stock. “At the very least, I believe we are looking at Raines and Howard leaving, as well as slower earnings growth in the wake of mandatory reforms placed upon the company,” he said.

Another analyst, CreditSight strategist Louise Purtle, described Fannie Mae’s accounting cover-ups as “Fannie being caught, if not with its pants around its ankles, then at least showing a generous amount of midriff.”

A September 17 report by Fannie Mae’s regulator -the Office of Federal Housing Enterprise Oversight, or Ofheo – found that Fannie hid billions of dollars of losses related to derivative trades and portfolio hedging in an account that would not affect its earnings. Moreover, it found that the company improperly deferred $200 million in expenses in 1998, which allowed management to qualify for a year-end bonus program by making an earnings target.

Ms. Purtle said the real issue in Fannie Mae’s accounting scandal is not its potential effect on shareholders, but on the global debt markets, where the company has over $960 billion in debt outstanding. She said that fact that Ofheo discovered the cover-up, rather than the company or its auditors, could well lead to another period of questions about the accuracy and integrity of American corporate financial statements.

Moreover, with foreign institutions holding 12% of the American agency debt market, a loss of confidence in the accuracy of Fannie Mae’s financial statements could result in selling that would further drive down the value of the dollar.

Fannie Mae’s Messrs. Raines and Howard defended the company’s accounting practices last week in testimony before Congress, contending that all their accounting decisions were approved by their auditors.