A separatist group that insists Texas is not part of the United States plotted to cheat banks and creditors out of $1.8 billion, a prosecutor told jurors as the group's federal fraud trial began.

Prosecutor Mike Uhl said Thursday that Republic of Texas leader Richard McLaren boasted to group members about his plan in a 1996 meeting at his headquarters in the West Texas mountains."There, Mr. McLaren says, this was going to be the biggest corporate takeover ever," Uhl said, referring to a videotape of the meeting.

At that meeting, separatists devised a scheme in which some members flew to Puerto Rico and attempted to open bank accounts using bogus currency the group had printed, Uhl said.

Members ran up their credit card bills on such expenses as a Lear jet lease for McLaren and a $300 Neiman Marcus sweater for his wife, Evelyn. They tried paying the bills with self-issued Republic of Texas currency they called "warrants."

The separatists admit they spent millions of dollars in warrants, but they contend the money was valid because the Republic of Texas has legitimate claim to more than $80 billion in state assets.

The Republic of Texas contends that the annexation of Texas as a state in 1845 was illegal and that the group's leaders constitute the legitimate government of the independent nation of Texas.

As an independent nation, the group claimed the right to issue its own currency. But federal prosecutors say the documents the group issued were bogus and amounted to no less than fraud.

Charges against the nine defendants include counts of conspiracy, bank fraud and mail fraud.

McLaren already is serving a 99-year prison term for his role in last year's kidnapping of a neighbor in the remote Davis Mountains Resort. The incident triggered a weeklong standoff with 300 state troopers and Texas Rangers.

Prosecutors started their case showing how the group tried to capitalize their "government" by placing liens on state property.

The group continued filing such liens, including one against Gov. George W. Bush, even after a federal judge ordered them to stop.