Former Stanford International Bank Ltd Chief Financial Officer James Davis was granted $500,000 bail on Monday and plans to plead guilty to charges related to an alleged $7 billion Ponzi scheme as early as next week, his lawyer said.

Davis, who has been cooperating with federal prosecutors for three months, faces a maximum of 30 years in prison on the conspiracy, fraud and obstruction charges. The government says the swindle was led by Texas billionaire Allen Stanford.

Davis, 60, pleaded not guilty to a three-count criminal information in the federal courtroom in Houston, but he plans to change his plea to guilty, David Finn, Davis' lawyer told U.S. Magistrate Judge Calvin Botley during a bond hearing.

Botley set Davis' bail at $500,000, with a $5,000 cash deposit. The former executive was also asked by the judge to surrender his passport and stick close to his home in Baldwyn, Mississippi.

Davis' cooperation with the government sets up a bitter court fight with Stanford, his former college roommate at Baylor University in Waco, Texas.

In media interviews given before his arrest on June 18, Stanford implied that Davis was responsible for the fraud that centers on certificates of deposit (CDs) issued by Stanford's offshore bank in Antigua, a notion that Davis' attorney disputes.

This thing was smoke and mirrors and duct tape for at least the last 15 years, Finn said about the offshore bank.

Davis, who has already signed a plea deal with prosecutors, is likely to appear before U.S. District Judge David Hittner on July 21 to enter his plea, Finn said.

A somber Davis appeared in court looking gaunt and wearing a dark blue suit. Finn said his client is under a lot of stress and has lost weight during the investigation into the bank's activities.

When you follow the money, it's not going to lead to James Davis, Finn told reporters, adding that his client only has $15,000 in his checking account.

Stanford faces criminal and civil charges for the fraud that the government says cost the firm's investors billions. Stanford and other executives are accused of falsifying accounting documents and bribing a regulator in Antigua to cover their tracks.

The government alleges the certificates of deposit issued by the offshore bank were marketed to clients as safe and liquid investments when the funds were actually used to pay redemptions for earlier investors and fund Stanford's lavish lifestyle.

Stanford, 59, who pleaded not guilty to the charges last month, is in a federal detention facility about 40 miles north of Houston awaiting trial.

(Reporting by Anna Driver; Editing by Steve Orlofsky and Richard Chang)