Criminal charges are likely to be sought against the most senior executives of Enron - including President George Bush's top financial donor, Mr Kenneth Lay - after former chief executive officer Andrew Fastow pleaded guilty to conspiracy and agreed to co-operate with the US Justice Department.
Fastow "was one of the masterminds behind a massive fraud scheme" at Enron, deputy US Attorney General James Comey told reporters after the plea bargain was announced late on Wednesday.
The giant Houston energy trader collapsed in December 2001, resulting in the loss of thousands of jobs and billions of dollars for shareholders.
Fastow, (42), the creator of secretive partnerships that hid massive debt and enriched executive officers, is in a position to unravel Enron's convoluted finances.
In a packed Houston courtroom, Fastow pleaded guilty to conspiring with others to falsify accounts and skim off $45 million for himself and his family.
Under a plea bargain, he will serve 10 years in prison and three years on probation, one of the toughest sentences meted out to a co-operating white collar criminal.
Former Enron chief executive Mr Jeffrey Skilling is now likely to face criminal charges within weeks and prosecutors will try to learn more about what Mr Lay knew about Enron's collapsing finances at a time when he was selling personal stock but making optimistic statements to encourage other people - including employees - to invest in the company.
Mr Lay was the biggest individual donor to the Bush campaign in 2000, and was nicknamed "Kenney Boy" by a grateful Mr Bush. The fact that he has not yet faced charges has been a source of criticism of the Bush administration's campaign against corporate crime, but analysts say it could be difficult to prove Mr Lay knew all that was going on in his own company.
Mr Leslie Caldwell, the head of the Justice Department unit investigating Enron, said that they now had "a seat on the 50th floor of Enron" and that whatever Andrew Fastow knew about what happened at Enron "will now be our knowledge".
Using information supplied by Fastow, prosecutors are expected to file criminal charges within days against former Enron chief accounting officer Richard Causey, who could surrender to face criminal charges as early as next week.
The investigation could also net some figures on Wall Street as Fastow could expose improper dealings in the financial and investing world.
Fastow was released on $5 million bail to continue helping prosecutors.
His wife, Lea, pleaded guilty to a tax-evasion charge and will be sentenced later this year. The Fastows were also required to forfeit $29 million in cash and property.
