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Ex-NBA player in court over Ponzi scheme

Tate George, a University of Connecticut guard, caught a pass, turned and sunk a shot that gave his Huskies the victory in a 1990 regional semifinal basketball game against Clemson. That shot catapulted Tate into the NBA, where he played for the New Jersey Nets and the Milwaukee Bucks.

But now he's on trial, accused of running a multimillion-dollar Ponzi scheme from 2005 to 2011 that targeted friends and pro athletes. Former NBA player Brevin Knight and fellow U Conn alum Charlie Villanueva invested $300,000 and $250,000, respectively, with Tate's company, The George Group.

Another alleged victim, Naima Fauntleroy, invested $46,000, hoping to pay down her education debt from Bowdoin College while attending Seton Hall Law School.

Tate George
Maury Phillips | WireImage | Getty Images
Tate George

George allegedly made false representations to perspective investors, claiming that The George Group had a real estate development portfolio worth in excess of $500 million.

That was seemingly enough to hook Knight and Villanueva, according to Paul Fishman, the U.S. Attorney for the Southern District of New Jersey.

(Read more: Busted! Inside one massive cybercrime ring)

According to the U.S. Attorney's office, Villanueva, who has a $30 million contract with the Detroit Pistons, was told he would get his initial $250,000 back, plus $37,500 and 2 percent of the gross on a real estate deal that was promised to yield millions more.

But the Connecticut land is still undeveloped, and Villanueva hasn't seen one nickel.

The U.S. Attorney said investors' money was actually sent to bank accounts controlled by Tate, and then used to pay for day-to-day living expenses—$3,500 for home repairs, $160 for pool services—as well as $19,000 to pay his tax bill to the IRS, and principal and interest payments to previous investors.

He also allegedly used the money to pay for clothes, meals, gas, a party for one his daughters and for a video production called "The Tate Show," which was posted on YouTube and follows the former Huskie to family events, business meetings and parties.

"Hi, I'm Tate George, the former NBA player turned real estate developer," he said in one clip.

We caught up with him outside the Trenton, N.J., courthouse, but he would not comment.

(Read more: Behind this pump-and-dump scheme was...a chimp?)

George has pleaded not guilty to all charges, which one of his lawyers, Thomas Ashley, claimed are clearly defensible. If convicted, George could go to jail for two decades and pay a $250,000 fine.

We'll continue to update you on this case on CNBC's "Power Lunch."