The 'Great Galactic Swindle'[*] is an essential key-mechanism for many MV strategies, because it will easily & swiftly give you everything that the AIs possess. Which - if you take away all their planets - can be used to win the map on that turn.. but that's not the only practical use this technique holds for scoreing games.

Here are the 4 key increments to successfully Swindle:

Research "Total Majesty" & build the 'Spin-Control-Center' (SCC) on a planet:

As the infoscreen explains, the SCC multiplies the strength of all ships orbiting this planet by factor 5. Not for actual combat though, only for diplomacy & intimidation.

The next thing is to put some decent warships at this planet:

As you can see there are 10 Cargo Hulls with 2 attack & 128 defense in orbit.

The formulae for military might is [ SumOfAttack + SumOfDefense + (Hitpoints/10) ] / NumberOfMilitaryShips.

For normal ships, that would then calculate = 20 + 1280 + 0 / 10 = 130. However, the SCC multiplies that by *5, so your Military Rating from these ships alone becomes 650!

In other words - the AI basically "thinks" these ships have +10 attack +640 defense; practically invincible by his own standards.

Note that you shouldn't have any other military ships because these will take down your military rating - for example if you have just somewhere an aditional 11th Defender with just +1 attack; the formulae would then be:

21 + 1280 + 0 / 11 = ~118 (less than 130 with only 10(!) SCC ships)

But this is only half of the story... what is also important is how strong your own military is in comparison to the AI military; and this is determined ingame by your MILITARY MIGHT RATING:

In this case, my own is 1089, but the Terrans have 0 (they don't have any military ships at all... which is a good good thing    because then, I will be appearing very intimidating to them and basically they will do what I ask for:

I've declared war & recontacted them and, because of my high Military Might Rating - they will accept ANY offer to ensure peace - even if it means I can have all their planets (which kicks them out of any game, defeating them). Generally you can also take all technologies (except weapons), Influence Points, Money, and let them make peace or attack with other factions as well (though this is only of meaning when you leave them a single planet...)

To pull this off in Dread Lords is very easy because all races do have access to the SCC and there are no limitations on diplomatic contacts.

In Dark Avatar you can quicksave & reload to contact all AIs again (circumventing the 16/8 turns diplomatic barrier after war-declaration) except for the AI sitting on the first slot (in the diplomatic view or gamesetup).

In Twilight of the Arnor the SCC is not available to all races... also that diplomatic contact-barrier stands firm so you need some proper pre-planing. Being Super-Diplomat helps because it will decrease the barrier to 50% time. The problem here is that once you declare war, the AIs may try to build Defenders or Heavy Fighter, thus, gain an own military rating, which may result in them not accepting the peace deal. A few things can be done still:

• don't trade weapons- or defensetechs to them, also no techs giving them diplomacy-rating
• get a high diplomacy-stats
• build the 'Galactic Bazaar' (this Galactic Wonder kind of turns you into a Super-Diplomat if you're not one....)
• if they did build the 'Galactic Showcase' or 'Diplomatic Translators' drop a spy on it, quicksave & reload - their diplomacy is then diminished.
• simply get more own military

As you can see in the first screenshot I've also build the 'Omega Defense System' on my SCC planet - which doubles the hitpoints of all orbiting ships (that's why my Cargo-"Paper Tigers" have 2 hitpoints....). In Dread Lords you can actually upgrade a Cargo Hull to a Large Hull (once you researched them) so there is a gain of +29 hitpoints (which will become 44 after racial stats) and 88 under the ODS so it may be worthwhile (or you just build a Stock Market instead to max econ score...   )

Military Might Rating effects the diplomatic behaviour of the AIs in several steps. Rules of thumb:

1. Only a tiny bit higher rating result in getting a diplomatic bonus (+your military strength) & you can secure slightly better techtrade deals. The AI also won't try to extort money from you. You can ask the AI 1 time in several months to help you out. Increased chance he won't trade weapons to you anymore [unless you decommission your own military (or he gains some...)] esp. if you were hostile before.
2. A fairly well higher military rating results in the AI highly welcoming peace and he will throw alot of goodies in to secure that deal. This can also be planets, but he usually stops short of five or 3 last remaining planets, that is, you can't instadefeat him. Usually such a scenario comes together if he has some own military ships as well. Or if your own SCC ships aren't strong enough. Still this can be already enough to win a map depending on what kind of game you play. Because, even if you don't get all of his stuff, you could instantly re-declare war & then offer peace again for just another set of planets or techs. But you cannot repeat this infinitely - 2 or 3 times, no more! After that, you become untrustworthy, which is the most severe diplomatic penalty ingame.
3. If your military rating is absurdly/omnipotently high - the AI will sacrifice all his game to you, so you can win any game. In that case it doesn't really matter that the expensive upgrade to ZeroPointArmor-ships did bankrupt you...

If you swindle an AI into oblivion you can still trade for his research-treaty - this will still net you some minor research-production every turn - as long as you don't reload!

Depending on your overall strategy & techlevel, there are some interesting shipdesigns:

• ZPA is best in DL/DA, (for your ultimate build you put either 1*HD Spike Driver IV or 1*Black Hole Eruptor onto a hull; depends on your miniaturization-level). However, ZPA is VERY expensive. For early SCC ships just a simply weapon, usually any Laser is good as it is small.
• KanviumIII is good for a sooner upgrade, and 'Superior Duranthium' for a very early one.
• Some of the good-ethical defenses also work well... 
• ...as do evil-weapons. In a planetary orbit ships do receive a bonus to their attack, which is also multiplied by your racial weapons modifier.

Alternatives:

The 'Great Galactic Swindle' is not a "must-do" strategy for a Million-Pointer-game. A very viable alternative is to simply techtrade for AI planets - 1 or 2 every turn. This has several advantage: 

1. No diplomatic penalties 
2. No bunkrupting shipupgrade
3. No research into early weapons/defenses needed. You can concentrate better to establish a working economy.

But this requires extensive knowledge about how to do proper techtrade/brokering and that is a complete topic in itself....

Personally, I find it best to actually combine both approaches; that is, I do a early cheap mediocre swindle just to get:

• alot of new planets filled with labs
• these grant me sufficient range to reach anywhere
• so I can make possession of all galactic resources where I first outmine Econ + Moral which enables me to swiftly establish an economy and even moral @ 100% while taxes are @ 79%.
• then I mine out all research-resources which will give me the power to plow through even expensive end-tier techs swiftly and these can then be used to gian everything else from the AI.

And because this acquisition of planets is more homogenous & balanced, (and if you do it right) you mustn't go broke or turn down your production-spending below 100% on any turn 

Additional thoughts:

One thing to realize is that the ability to swindle relies completely on your diplomatic factors & your MMR. If you manage to pull of an early high MMR with conventional ships, no matter from what source they stem or how their design actually looks like, you could pull this off even without the SCC. One way, if you just want to end a game, would be to trade for all available AI ships - Scouts, Freighters, Space Miners, Defenders etc - and upgrade them all to max att/def paying with the longest term lease. Such a move does also result in a big increase in MMR - and especially if you manage to trade for all AI military ships (this is actually a must).

If the AI is reluctant to do your biding then quicksaveing & reloading might work. This will update the MMR to reflect the current situation (otherwise it's always laging 1 turn behind!)

[*] AFAIK this is also known as "Mumbler strat" or anytime someone refers to "sueing for peace by taking planets" etc it just means this strategy.