Ex-NBA Player Charged in $2M Ponzi Scheme

By David Voreacos and Eben Novy-Williams - Sep 24, 2011 3:25 AM GMT+0700
Enlarge image

Tate George is shown in this March 24, 1990 file photo. Photographer: AP

Tate George, a former player for the National Basketball Association’s New Jersey Nets and Milwaukee Bucks, was charged with running a $2 million Ponzi scheme that targeted ex-professional athletes.

George, 43, raised more than $2 million for his company, The George Group, after telling investors his real-estate development portfolio was worth $500 million, according to a Federal Bureau of Investigation complaint accusing him of wire fraud.

“In reality, The George Group had virtually no income generating operations,” U.S. Attorney Paul Fishman in Newark, New Jersey, said in a statement today.

George used the money he raised to pay early investors in his company and to fund living expenses such as mortgage and child-support payments, restaurant meals, clothing and gas, according to the FBI complaint. George faces as long as 20 years in prison for the scheme, which prosecutors said began in 2005.

He surrendered to the FBI today and appeared in federal court in Newark, wearing a light-green suit and handcuffs. U.S. Magistrate Judge Patty Shwartz set his bail at $250,000, secured by his mother’s house in Newark. Shwartz ordered George to turn over a list of his real-estate projects. She declined a prosecutor’s request to order George to disclose all the investors in those projects.

‘Maintains His Innocence’

“He maintains his innocence and will plead not guilty,” George’s attorney, Thomas Ashley, said outside the courtroom. “All these charges are clearly defensible.”

One investor, identified in the complaint as B.K., transferred $300,000 in July 2007 for what George said was a real estate project in East Orange, New Jersey, according to the complaint. George promised that he would pay the investor $18,000 in interest by the next January, the FBI said.

George was questioned under oath on March 10 about B.K.’s investment and “falsely testified that he had spent the entirety of B.K.’s $300,000 on the purported real estate project,” the FBI said.

In 2008, former NBA player Brevin Knight filed a breach-of- contract lawsuit against George, The George Group and a third defendant over a $300,000 loan in June 2007 for a development project in East Orange. Knight secured a $450,000 judgment against George and his company in August 2009, according to records in federal court in Newark.

Arrest Ordered

In October 2010, Knight asked a judge to order George to appear at a deposition to explain why he had not paid any of the judgment. In January, U.S. District Judge William Martini ordered George’s arrest, records show.

On March 1, George appeared at a contempt-of-court hearing in Newark and was ordered to appear for a March 10 deposition, records show.

George attended the University of Connecticut, where he hit the game-winning shot against Clemson University in the third round of the 1990 National Collegiate Athletic Association tournament. With one second remaining and Connecticut trailing by one, George caught a full-court pass from teammate Scott Burrell, spun around and hit a 15-foot jump shot as time expired.

He was selected by the Nets with the No. 22 pick in the 1990 NBA draft. In a four-year career, George averaged 4.2 points and 1.8 assists a game.

The case is U.S. v. George, 11-mag-03197, U.S. District Court, District of New Jersey (Newark).

To contact the reporter on this story: David Voreacos in Newark, New Jersey at dvoreacos@bloomberg.net; Eben Novy-Williams in New York at enovywilliam@bloomberg.net.

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Michael Sillup at msillup@bloomberg.net.