HOUSTON (Reuters) - US government attorneys told a Texas judge yesterday that accused swindler Allen Stanford should stay in jail pending trial because he would likely flee the country rather than face a potential life prison sentence.

US Magistrate Judge Frances Stacy last week said that Stanford, who faces criminal charges for a $7 billion Ponzi scheme, may leave federal custody, provided he comes up with $100,000 for a cash bond, lives with his girlfriend in a Houston high-rise apartment and wears a tracking device.

Stanford remains in custody after the US Justice Department opposed bail of any sort and sought to keep Stanford in jail until his trial, now set for August. Stanford faces life in prison if convicted of all 21 criminal charges.

Now US District Judge David Hittner, who will preside over the upcoming criminal trial, must decide whether Stanford, 59, can walk free until his trial begins. Judge Hittner said he would announce a decision by this afternoon.

Stanford was brought to Houston federal court for the third time early yesterday, dressed in a dark suit but still shackled, after spending the weekend in the Montgomery County Jail in Conroe, Texas, an hour north of Houston.

The once high-flying billionaire and sports promoter has been in federal custody since June 18, when he surrendered to the FBI in Virginia after a Houston grand jury indicted him on charges of conspiracy, fraud and obstruction of justice.

The government argued that Stanford was a flight risk and would likely flee the country rather than face a lifetime in jail. The statutory maximum prison sentence for all 21 charges is 375 years.

"The only way to reasonably assure the thousands of victims who lost billions of dollars that they will get their day in court is to detain Mr. Stanford," said Gregg Costa, a US prosecutor.

Prosecutors said that about $1 billion in investor deposits is still missing, which Stanford could possibly tap to fund a quick getaway.

Dick DeGuerin, Stanford's lawyer, argued that Stanford has demonstrated his willingness to answer the government's charges by offering to surrender three times.

"We wanted to show a track record of Mr. Stanford wanting to fight these charges," DeGuerin told Judge Hittner.

The courtroom was filled with Stanford's supporters, including his girlfriend, estranged wife and at least four of his six children.

According to the US Securities and Exchange Commission, Stanford, with the help of executives at his firm and a top Antigua and Barbuda financial regulator, ran a "massive Ponzi scheme" for over a decade that centred on certificates of deposit in his bank in Antigua.

Stanford says that he is innocent of the charges and that his multinational business was legitimate until the SEC "disembowelled" it by filing civil charges, which led to the confiscation of all his assets by a court-appointed receiver.

James Davis, 60, Stanford Financial Group's chief financial officer and Stanford's former roommate at Baylor College, is due in court on July 1 to face similar criminal charges.