Under the agreement between the company and the government, charges will be dismissed if CA successfully completes an 18-month monitoring period. The company will also pay $225 million in restitution to shareholders who lost money investing in the company. CA at the same time settled with the Securities and Exchange Commission, which had jointly conducted the probe with the Justice Department.

During a busy day in the Brooklyn courtroom of Judge I. Leo Glasser, CA's former general counsel Steven Woghin pleaded guilty to charges of conspiracy to commit securities fraud and obstruction of justice. He also admitted that he coached employees on how to answer questions to deceive investigators, saying Mr. Kumar instructed him to do so. In addition, he admitted to drafting a backdated contract -- with a Dec. 31, 1999, date -- in early January of that year. He is cooperating as part of his plea deal and probably will be a key witness against Mr. Kumar.

LATEST DEVELOPMENTS Read the text of the indictments1 against Sanjay Kumar and Stephen Richards, and the deferred-prosecution agreement2 between Computer Associates and the Justice Department. Also see a shareholder letter3 released by CA.

Deputy U.S. Attorney General James Comey, along with Roslynn R. Mauskopf, the U.S. Attorney in Brooklyn, unveiled the indictments of Messrs. Kumar and Richards. While noting that the investigation was continuing, Mr. Comey wouldn't comment on who else might be targets.

But a senior Justice official familiar with the continuing investigation said one of those still under investigation is former CEO and founder Charles Wang. He hasn't been charged with any wrongdoing. His lawyer, Richard Lawler, declined to comment.

Prosecutors are well-stocked with potential witnesses in the continuing probe and any future trials. The government has secured guilty pleas from five former executives, including Mr. Woghin and former Chief Financial Officer Ira Zar, all of whom have agreed to cooperate.

Mr. Kumar "denies any wrongdoing and expects to be exonerated of all charges," said a statement from his lawyer, Jack Cooney. The former chief executive cooperated vigorously with investigators, Mr. Cooney said, asserting that he recommended inquiries by two outside law firms, "insisted that all documents be made available, that all employees cooperate" and that he "fired those that did not."

Mr. Richards's lawyer, David Zornow, said in a statement that his client "was not responsible for the finance and sales accounting functions that determined when revenue was recognized, ... vigorously denies any wrongdoing and is confident he will be vindicated at trial."

In their indictment, prosecutors say Mr. Kumar himself signed one of the backdated contracts, flying on the company jet from an airfield in Farmingdale, N.Y., near CA's Islandia headquarters, to Paris to do so. The contract, valued at $32 million, bore a June 30, 1999, date, even though it was "finalized" around July 8, prosecutors said. Mr. Kumar then bragged how "his Paris caper had saved the quarter" for the company, Mr. Comey said at a news conference.

CNBC DOW JONES BUSINESS VIDEO Computer Associates CEO Kenneth Cron says the company is "partnering with the government" to bring charges against some individuals.   Windows Media Player Required: HIGH bandwidth4 | LOW bandwidth5

That contract was trifling compared with others that were backdated, according to prosecutors, in an increasingly desperate attempt to meet financial projections that the company was routinely missing. In early October 1999, the indictment charges that CA backdated a $102 million contract to Sept. 30. In early January 2000, Mr. Kumar negotiated a $300 million contract, prosecutors say, though it bore an "effective date" of Dec. 31. He signed it, they charge, without an execution date.

The indictment also includes snippets from an e-mail exchange that implied that Mr. Kumar had direct knowledge of another questionable deal, involving a contract improperly booked in the quarter that ended March 31, 2000. Six days after the quarter ended, on April 6, the indictment says, someone identified only as "Sales Executive #3" sent Messrs. Kumar and Richards an e-mail about negotiations with a customer who was refusing to backdate a contract.

The e-mail allegedly discussed getting the customer to "sign the contract, leaving the date blank," noting that the customer couldn't "backdate" the contract because it was a new company that wasn't technically formed until April 1, 2000.

On April 7, Sales Executive #3 sent Messrs. Kumar and Richards another e-mail celebrating the end of successful negotiations with that customer, saying in part: "I'm taking my kids shopping tomorrow -- on you!" Mr. Kumar replied: "Mr. B. Shopping is on me." The indictment also says Mr. Richards instructed Sales Executive #3 to write in a March 31, 2000, date on the contract and fax it to CA's headquarters.

Prosecutors allege that Mr. Kumar deceived the company's own lawyers in early 2002, shortly after the government probe began, and lied to lawyers hired by the board at least four times from October 2003 to April 2004. In one of those interviews, the indictment charges, Mr. Kumar "falsely stated that he had never monitored end-of-quarter contracting activity to determine whether CA would meet analyst earnings estimates."

In court Wednesday, the outside lawyer who headed the board's internal probe, Robert J. Giuffra Jr., told Judge Glasser that CA's board "deeply regrets what has happened." While he said CA accepts responsibility, he also pointed to former executives who had "betrayed" the board. The deferred prosecution, Mr. Giuffra said, "recognizes that CA is a company worth saving."

Mr. Woghin, CA's former general counsel and himself a former federal prosecutor, quietly read a prepared statement. "I am ashamed to be standing here today," he said, his voice breaking. "It is entirely inconsistent with my behavior throughout my more than 30-year legal career."

CA has restated about $2.2 billion of revenue as wrongly booked, though the company has said it found no evidence of phony sales. The SEC said yesterday that the figure was more than $3.3 billion in an expanded time frame. Chairman Lewis Ranieri said the agreement "represents a critical step in closing a deeply troubling chapter in our company's history."

CA also pledged to help retrieve compensation paid to former executives involved in wrongdoing -- pay that has outraged many shareholders. Top CA executives received performance-based bonuses calculated partly on the false financial figures. And critics have previously alleged the company inflated revenue to trigger a mammoth stock award of more than $1 billion that went to Messrs. Kumar and Wang, and co-founder and current director Russell Artzt.

In its complaint, the SEC for the first time lent solid weight to that charge, saying that CA's improper accounting started as far back as the fourth quarter of fiscal 1998. In the first quarter of fiscal 1999, the SEC alleged, 15% of the company's revenue was improperly recorded. It was during that quarter -- in May 1998 -- that the giant stock award was made. The men later returned a portion of it to settle a shareholder suit.

Mr. Comey, the deputy attorney general, said the deferred prosecution was a precedent of sorts for the department's three-year-old corporate-fraud task force. The question in such cases is whether the company can be rehabilitated or has to be "put down" because the criminal wrongdoing is so pervasive, Mr. Comey said.

The deferred-prosecution agreement lays out a laundry list of conditions. CA must appoint an independent monitor who will examine revenue-recognition practices, accounting controls and various ethics and compliance matters. The prosecution will be deferred for 18 months from the date of the monitor's appointment, presuming CA meets its obligations. Prosecutors and the SEC can extend the term if they feel reforms haven't been properly implemented -- or if the monitor reports problems. CA also agreed to add two new independent directors to its board, and make other, smaller changes.

The $225 million restitution fund that will be paid to aggrieved shareholders comes in addition to 5.7 million shares that CA agreed in August 2003 to issue to settle shareholder suits. Those shares are valued at about $144 million based on CA's closing price Wednesday.

CA also said yesterday that it expects to name a new CEO in about 30 days. Board member Kenneth Cron has assumed the role on an interim basis.