Investors from four countries sued Antigua and Barbuda on Monday, arguing that the twin-island Caribbean nation benefited from and knew about Texas financier Allen Stanford's alleged $7 billion fraud.

Antigua is sovereign but not above the law, the lawsuit filed in federal court in Houston, said. It became a full partner in Stanford's fraud, and reaped enormous financial benefits from the scheme.

Stanford faces civil and criminal charges related to the scheme U.S. prosecutors say was centered around certificates of deposit issued by his Stanford International Bank in Antigua.

Stanford stuffed Antigua's coffers - and its officials' pockets -- with money stolen from unsuspecting customers, the lawsuit, which seeks $8 billion in damages, the lawsuit said.

A representative of the government in Antigua could not immediately be reached for comment.

Stanford was Antigua's most lavish patron and largest employer. The financier, who was knighted by the Antiguan government in 2006, built a cricket field and sponsored a $20 million match on the island in 2008. He also owned two islands, executive offices, a restaurant and the island's newspaper.

All of Stanford's investments in Antigua was funded with money looted from clients, according to the lawsuit filed by investors from the U.S., Mexico, Columbia and Peru.

Stanford and other executives are also accused of bribing Leroy King, an Antiguan regulator with oversight over Stanford's offshore bank in a 21-count indictment. They sought to cover the tracks of the alleged scam by falsifying documents, according to prosecutors.

Stanford, who is in jail ahead of his trial, said he is innocent of any wrongdoing.

The civil lawsuit filed in U.S. District Court in Houston is called Frank v. The Commonwealth of Antigua and Barbuda 4:09-cv-2217.

(Reporting by Anna Driver in Houston; Editing Bernard Orr)