Investors from four countries have sued Antigua and Barbuda, alleging in court filings Monday that the twin-island nation benefited from Allen Stanford's operation.

The Texas billionaire is facing criminal charges for operating an alleged US$7-billion Ponzi scheme.

"Antigua is sovereign but not above the law," said the lawsuit, Frank vs The Commonwealth of Antigua and Barbuda, filed in Houston.

It claims US$8 billion in damages, Reuters reported.

Remorseful

Also on Monday, a lawyer for James M. Davis, the former finance chief of the Stanford Financial Group, said he was remorseful for helping to swindle investors.

Davis made his first court appearance after being charged last month as part of the federal government's criminal case against Stanford.

Stanford, Davis and executives Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt are accused of orchestrating a massive Ponzi scheme.

Davis pleaded not guilty to conspiracy to commit mail, wire and securities fraud; mail fraud; and conspiracy to obstruct a Securities and Exchange Commission (SEC) investigation.

He was granted a US$500,000 bond at his hearing.

David Finn, Davis' defence attorney, said he expects his client to return to court next week and plead guilty to all three counts as part of an agreement with prosecutors."He feels awful he did wrong,"

Finn told reporters.

During the court hearing, prosecutor Gregg Costa said Davis has been cooperating with investigators for months and that a plea agreement has been worked out in the case. Costa declined to comment after the hearing.

Locating missing money

Finn said Davis, 60, has been helping investigators in their attempts to locate missing money that was taken from investors.

Prosecutors say nearly US$1.2 billion of the US$7 billion Stanford and his co-defendants are accused of bilking from investors can't be accounted for.

"Words can't express the sorrow he feels for letting all those people down," Finn said.

Davis did not speak with reporters after he posted bond and left the courthouse.

Finn said Davis' plea agreement does not guarantee he will get a reduced sentence. Davis faces up to 20 years in prison for the most serious charge against him.

"Obviously, you're hoping down the road your cooperation will be appreciated by the government or by the trial judge," Finn said.

Prosecutors allege Stanford and the executives at his now-defunct Houston-based Stanford Financial Group misused most of the US$7 billion they advised clients to invest in certificates of deposit from the Stanford International Bank in the Caribbean island of Antigua.

They are accused of mis-representing the bank's financial condition, its investment strategy and how it was regulated.

"This thing was smoke and mirrors and duct tape for the last 15 years," Finn said of Stanford's business empire.

Stanford, Pendergest-Holt, Lopez and Kuhrt pleaded not guilty last month to the charges in a 21-count indictment issued June 18. Stanford is being held without bond while the other three are free on bond.

Lavish lifestyle

Investigators say Stanford secretly diverted more than US$1.6 billion in investor funds as personal loans to himself to pay for his lavish lifestyle.

Finn said Davis, who was Stanford's roommate at Baylor University for one semester, did not financially benefit from the scheme and currently only has US$15,000 to his name.

Also indicted is Leroy King, the former chief executive officer of Antigua's Financial Services Regulatory Commission.

King, accused of taking bribes from Stanford to overlook irregularities at his bank, is awaiting extradition to the United States.

Stanford, Pendergest-Holt, Lopez, Kuhrt and King are charged with wire fraud, mail fraud, conspiracy to commit mail, wire and securities fraud and conspiracy to commit money laundering.

Stanford, Pendergest-Holt and King are also charged with conspiring to obstruct an SEC investigation.

Antigua

The lawsuit against Antigua claims the country profited from the Stanford operation.

"It became a full partner in Stanford's fraud, and reaped enormous financial benefits from the scheme," said court documents.

The billionaire was knighted by Antigua, was a big sponsor of cricket and had investments on the island.

He "stuffed Antigua's coffers - and its officials' pockets - with money stolen from unsuspecting customers," said the suit.

Stanford was considered one of the richest men in America with an estimated net worth of more than US$2 billion.

Dick DeGuerin, his defence attorney, says his client is now penniless.

Stanford denies any wrongdoing.

- Wire reports