Texas financier Allen Stanford, accused by the US Securities and Exchange Commission (SEC) of running a ''massive, ongoing fraud,'' was charged with $7 billion fraud by the US prosecutors yesterday.

Also charged in a 21-count indictment was Leroy King, ex-head of the Antigua and Barbuda Financial Services Regulatory Commission (who was expelled yesterday from the post), Gilbert Lopez, the chief accounting officer at Stanford Group, Laura Pendergest-Holt, Stanford's chief investment officer, who was previously charged with obstruction, and Mark Kuhrt, Stanford's former global controller.

Stanford, 59, faces charges of conspiracy to commit securities, mail and wire fraud. The SEC said King helped Stanford conduct a Ponzi scheme in exchange for bribes.

According to the SEC, Stanford's investment firm made "improbable and unsubstantiated'' claims about its ability to generate "safe" returns of more than 10 per cent, while also misleading investors of their exposure to Bernie Madoff's alleged Ponzi scheme (See: A run on Stanford's Antiguan bank as US authorities cry fraud).

The SEC sued Stanford and two aides on 17 February, accusing them of misleading investors  in certificates of deposit in Antigua-based Stanford International Bank. (See: Missing billionaire accused of fraud found by FBI).

Stanford was arrested June 18 in Fredericksburg, Virginia, at his girlfriend's home.

The alleged scam used Stanford's bank in Antigua and alleged bribes to officials there to defraud at least 30,000 investors through the sale of certificates of deposit, the Justice Department said.

''Stanford's investors were simply looking for safe investments and low risk,'' said Robert Khuzami, director of the US Securities and Exchange Commission's Division of Enforcement, at a news conference yesterday in Washington.

''With Stanford they thought they had found such an opportunity. But what they actually found was a complicated array of phony financial statements, fabricated performance and sham audits,'' he added.

Stanford ''misused and misappropriated'' assets, including diverting at least $1.6 billion into undisclosed personal loans to himself, said assistant US attorney general Lanny Breuer. The scam put the ''integrity of the markets'' at risk, he said.

Stanford faces as much as 20 years in prison if convicted of the most serious counts.

In a statement, Stanford's defense lawyer, Dick DeGuerin, said he will fight the charges.

''The present insolvency of the Stanford Companies was caused by the SEC's heavy-handed actions, which have destroyed and continue to destroy much of the value of the Stanford Companies and consequently, the interests of investors,'' he said in the statement.

In March, the troubled financial group had cut about 1,000 jobs in the US, nearly 85 per cent of the company's US employees. The group employs about 3,000 workers worldwide, including the US, Latin America and the Caribbean (See: Stanford Financial sacks 1,000 employees in US ).

The Stanford Group sold $8 billion of certificates of deposit in Stanford International Bank. The company's network of financial advisers told clients their money would be placed primarily in easily sold financial instruments monitored by more than 20 analysts and audited by Antiguan regulators, according to the SEC lawsuit.

The case is seen similar to the giant $50 billion scam originated by Bernard Madoff early this year (See: US Congress investigates Madoff scam).

Steven Tyrrell, the chief of the Justice Department's fraud section in its criminal division, said he was concerned Stanford would be in a position to obstruct justice if not in jail, as he had already ''paid thousands of dollars in bribes.''