TEXAS, USA – Financier R Allen Stanford built a vast fortune through his network of banks and other businesses in the US, Latin America the Caribbean, and he led a lifestyle befitting a billionaire business magnate.

Once considered one of the US’s wealthiest people, with an estimated net worth of more than US$2 billion ($172.5 billion), Stanford snatched up luxury homes and cars, private jets and yachts, and became so prominent in his adopted country of Antigua, where he took on dual citizenship, that he was knighted by the Caribbean island’s government and became known as “Sir Allen.”

Yesterday, after much delay, federal prosecutors in Houston were due to begin laying out their case against Stanford, telling jurors that the 61-year-old’s business empire was built on smoke and mirrors and that he bilked investors out of more than US$7 billion over 20 years as part of a massive Ponzi scheme. Jury selection in Stanford’s trial resumed yesterday, after starting a day earlier, and was anticipated to conclude with opening statements expected later in the day.

Stanford, who denies the claims and says his businesses were legitimate, is charged with 14 counts, including wire and mail fraud, and faces up to 20 years in prison if convicted. He is expected to testify during the trial, which will likely last at least six weeks.

Stanford’s business empire was run through the Houston-based Stanford Financial Group, but at its heart was Antiguan-based Stanford International Bank. The bank mainly sold certificates of deposit, or CDs, that promised substantially higher rates of return than US banks and promised investors their money was safe.

Prosecutors say Stanford used money from the sale of the CDs, which were sold to clients from more than 100 countries, to pay off those purchased earlier once they matured and to support his other businesses, which included other banks, a brokerage firm that sold the CDs, an airline, cricket grounds and restaurants. They say Stanford used up to US$2 billion of investor funds as personal loans to support his lavish lifestyle, and that he and three former executives at his companies who also face charges covered up their misdeeds by fabricating the bank’s records and bribing Antiguan regulators.

“It’s a bait and switch,” prosecutor William Stellmach said at a court hearing last week.

But in court documents filed earlier this month, Stanford’s attorneys argued that he intended to pay CD investors through his other companies if authorities hadn’t seized them and begun selling them off.

“This fraud (theory by the government) is just wrong,” Ali Fazel, one of Stanford’s attorneys, said at that hearing. “Our defense is we didn’t do anything wrong.”

A gag order bars lawyers from publicly discussing the case.

Stanford has been in jail since his arrest 2 1/2 years ago because he was deemed a flight risk. His trial was delayed after he was declared incompetent due to an addiction he developed in jail to an anti-anxiety drug and underwent treatment for eight months last year. He was also evaluated for any long-term effects from being injured in a September 2009 jail fight.

US District Judge David Hittner declared Stanford fit for trial last month.

Once Antigua’s richest citizen, primary banker and its largest private employer, Stanford had his assets seized and now has court appointed attorneys after an insurance policy that had been paying for his defense was revoked.

Stanford is on his fifth set of lawyers since being indicted. Previous attorneys accused him of being difficult.

The three other indicted former executives are to be tried in June. A former Antiguan financial regulator was also indicted and he awaits extradition to the US.

Stanford and the former executives are also fighting a Securities and Exchange Commission lawsuit filed in Dallas that makes similar allegations.