HOUSTON (CNNMoney.com) - The former head of Enron's prime money-making division testified Tuesday that he took part in covering up nearly $200 million in losses with the implicit approval of then CEO Jeff Skilling and that he improperly booked reserves as current profits to satisfy earnings targets.

Just days before first quarter results were due in 2001, David Delainey, former CEO of Enron's energy trading business, said the company shifted part of its retail energy trading operation, and nearly $200 million in losses that came with it, to its more profitable wholesale trading business to avoid telling Wall Street that all wasn't well on the retail side.

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"There was no business purpose to this other than to hide the loss," Delainey told prosecutors, who wanted to know how he felt about the maneuver the day before he was going to get the OK for it from Skilling and other high level Enron executives. "I knew this was not proper."

Delainey said that when he voiced his concerns over the tactic the next day during the meeting, two executives were visibly upset and he said Skilling asked him "What do you want to do?"

The prosecutor then asked Delainey how he perceived Skilling's comment.

Delainey said he took it as "Get in line, we've come up with a solution."

Delainey said the finances at Enron's retail trading division, which competed with utilities in de-regulated states to sell electricity to private customers like J.C. Penny and Blockbuster, were a "basket case."

He said the unit had no way to tell whether the contracts it sold were profitable and that it was taking huge losses on fixed price contracts it sold as energy prices soared in California.

Yet despite this, Delainey said he nor Skilling ever told analysts or investors of the problems at the unit.

Delainey pled guilty in 2003 to insider trading and forfeited $4.2 million in profits from his stock sales. In addition, he agreed to cooperate with the government in exchange for possibly receiving a lighter prison sentence, which could range from zero to 10 years. He said that cooperation with the government entailed telling the truth about events at Enron.

The fact that Delainey struck a deal with the prosecution will most likely be pointed out again by the defense when it cross examines him Wednesday.

Delainey, who was in his mid-thirties during the time in question and was receiving yearly bonuses to the tune of $3 million, also said he improperly booked reserves as current profits to satisfy earnings targets.

He said the company's wholesale trading division was profiting from the huge swings in energy prices caused by California's energy crisis in the second half of 2000.

"We were making tons of money, we were knocking the cover off the ball," he told the jury.

Delainey said Enron dipped into his division's strong profits to help bolster results from other parts of the company that came up short in meeting earnings targets.

He testified that he told Skilling that the wholesale trading business had a "a couple of quarters in the pocket" -- implying that it had enough cash on hand to cover earnings misses at other units -- and that the money was moved to a reserve account. But when pressed by the prosecution, Delainey said moving money from reserves to other parts of the business wasn't a legitimate practice.

"The reserves cannot be booked as such, you cannot have a couple of quarters in the pocket," he said. "It's cheating and misrepresenting the stated profitability of the company."

Delainey said he wasn't surprised to learn that Enron's chief accountant, Richard Causey, was using the reserves to hit earnings targets. "It was standard operating procedure at Enron," he said. "We tended to be pretty fast and loose with the rules."

Delainey also said he never told analysts and investors about the wide swings in the trading division's daily profit and losses. "It would have highlighted the risks we had inherent in our Enron North America Division," he said.

Previous testimony from government witnesses also revealed that the profitable wholesale trading unit was also used to hide millions of dollars in losses from the underperforming retail energy unit, which sold energy directly to consumers and businesses.

Earlier in the day, Wanda Curry, a former top accountant at Enron's energy trading unit, tearfully recalled how she told her superior that she couldn't follow the more aggressive accounting methods that the company wanted.

"I was being discriminated against because of my morals, that basically my career was over," she said she told her boss.

She also said she never brought her concerns over Enron's accounting to the attention of former Enron CEOs Ken Lay or Jeff Skilling.

Despite Curry's emotive testimony, the jury, which entered the courtroom wearing Mardi Gras beads, showed little reaction.

Beginning the fifth week of the trial of former Enron CEOs Ken Lay and Jeff Skilling, Curry testified Monday that Enron's retail energy trading business, Enron Energy Services (EES), was in a state of such disarray that one co-worker once found a tray of uncashed checks totaling $30 million under his desk, Reuters reported.

After Curry left the courthouse Tuesday, Tim Belden, a former power trader at Enron's West Coast desk who worked under Delainey, took the stand.

Belden, who pleaded guilty in 2002 to conspiracy to commit wire fraud, was considered the mastermind for some of the strategies that contributed to the energy crisis in California and was the first person to be charged in the manipulation of Western energy markets.

He told the jury how the company made money by taking advantage of wide fluctuations in the price of electricity.

Cross examination of Belden was put off until Wednesday morning.

Lay and Skilling face multiple counts of fraud and conspiracy for lying to investors about the health of the company. The two men deny the charges and say there was no conspiracy to commit fraud.

Enron filed for bankruptcy in December 2001, at the time the largest bankruptcy in U.S. history. It was once the nation's seventh largest company.

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