By Laurel Brubaker Calkins and Andrew M. Harris

HOUSTON, USA (Bloomberg) -- A group of Allen Stanford-run business investors has sued the government of Antigua and Barbuda, claiming the Caribbean nation helped the financier engineer an alleged $7 billion fraud scheme.

In a lawsuit filed Monday in a US Court in Houston, seven investors say the island government received money in exchange for helping the financier conceal the financial condition of the Antigua-based Stanford International Bank Ltd.

“Antigua is sovereign but not above the law,” the investors said in their complaint. “It became a full partner in Stanford’s fraud, and reaped enormous financial benefits from the scheme.”

The named investors, three of whom live in the US, three from Latin America and the last the trustee for a retirement plan, seek class action or group status on behalf of all who were Stanford bank customers as Feb. 16, 2009.

“We’re seeking to represent victims worldwide to recover losses from the government of Antigua, which has benefited tremendously from Allen Stanford showering the island with money,” plaintiffs’ lawyer Gregory Blue said in a phone interview.

The investors are seeking at least $8 billion in damages, which can be tripled under US civil racketeering laws, and claiming the class could include tens of thousands of people.

Antiguan Attorney General Justin Simon said he has not yet seen the complaint and was not aware that it had been filed.

“I have only been informed of an intention to do so,” he said Monday in a telephone interview. “I have not yet seen any documents and until I do so I would be unable to make a comment.”

On Feb. 17, the US Securities and Exchange Commission sued Stanford, two business associates, the bank and two other Stanford-run businesses, accusing them of perpetrating a “massive” fraud scheme centered on the bank’s sale of certificates of deposit.

Stanford and the individual co-defendants, Stanford Group Co. Chief Financial Officer James M. Davis and Chief Investment Officer Laura Pendergest-Holt, were later criminally charged upon similar allegations.

While Stanford and Pendergest-Holt have proclaimed their innocence, Davis’s lawyer said he will plead guilty to criminal charges later this month.

Davis, who was charged separately from the other defendants, entered a preliminary plea of not guilty today before a federal magistrate judge in Houston. His lawyer said he plans to plead guilty after his arraignment.

Criminally charged with Stanford was Leroy King, who had been chief executive officer of Antigua’s Financial Services Regulatory Commission and who prosecutors accused of taking bribes from Stanford to overlook irregularities in the bank’s records and reports.

Money allegedly received by King and by the Antiguan government from Stanford -- and through him from Stanford depositors -- gave them a “stake” in the Stanford enterprise, the investors said.

“For many years, Antigua’s corrupt efforts to shield the Stanford enterprises from regulatory and private scrutiny were successful, thus allowing the Stanford enterprises to continue to steal money,” Blue wrote in the complaint.

He is a partner in the New York law firm of Morgenstern & Blue LLC.

Finn and Ian McCaleb, a spokesman for the US Justice Department spokesman, both declined to comment on the investors’ suit against Antigua. DeGuerin said he would not comment until after he had read the 74-page complaint.

Neither SEC spokesman Kevin Callahan, nor Nancy Sims, a spokeswoman for the receiver appointed by a Dallas judge to run the Stanford businesses during the SEC suit, returned calls seeking comment.