My first impression is that you're not capturing enough planets before you hunker down and start turtling. If you want $$$, the best way to get them is to capture planets. It can be very tempting to build expensive structures like trade ports early on, but this doesn't make economic sense until later in the game. It always depends on the map, but in general you should ensure you have at least 2 planets for every 3 your enemy controls.
The first thing you'll do when a game starts is dispatch scouts. You need to know the map layout; where is the wealth, how well is it defended by militia, and where is the enemy. As you start to get the whole picture, you should be formulating your strategy. Which planets are you going to take, and how are you going to take them? There are only two reasons to stop capturing neutral planets: either you need to recall all your units to the fight, or there is literally nothing (accessible...) left to colonize.
As far as defenses go, your best bet is always with your fleet. Turrets and hangers are exorbitantly expensive, particularly if you need to buy tactical upgrades to build them. You will almost always get a cheaper and more effective defense out of your fleet, and it is capable of moving from one planet to another. The best static defense to support a defensive fleet is always the repair bay. In fact, a single level 1 capital ship with two repair bays will defeat any pirate raid, even at maximum danger levels.
Starting by turtling doesn't work in any RTS game I can think of.
Contrary to popular opinion that it's a rush game, this is the first thing a player does in Starcraft: get defenses up at choke points. Although its pacing is different, Sins is in many ways more aggressive than Starcraft because there is a much greater rivalry for resources in the early game. In Starcraft, it's very common for most of the expansion sites in a 1v1 to be untouched over the course of the game. This is untrue in Sins; unless players started very close together it's more likely that virtually every planet will have been colonized before the game's end.
Also...not sure if the AI is "cheating" or not but when I got into the game, I immediately created 2 colony frigates & sent them to 2 different planets. As soon as I got to each one, there were approximately 3-4 LRF already at each planet. How could the AI have created those, and got them to each planet, so quickly??
These are called neutral militia. They inhabit the neutral planets at the start of the game, and must be eliminated if you want to claim their planets as your own. The number and type of militia depend on the planet. Asteroids are always very lightly defended, ice and volcanics have low to moderate defenses, and desert and terran planets can be moderate to extreme. The neutral militia will attack anyone, including enemy AI players.
You can colonize the planet while militia are present, but any siege frigates in the militia will immediately begin bombing it. If you kill the siege frigates, you can colonize the planet and then build turrets to kill the remaining militia. This is a favourite strategy by multiplayer gamer and if well played can defeat any militia force.