He said Michaels told him he had backing from an Asian company and he went along with the plan because it would enable people in the sport to "follow their dreams''.
But despite numerous meetings at Michaels' Greek restaurant on Auckland's Ponsonby Rd, nothing came of the competition and Lomu walked away.
Lomu said Michaels had dragged his name through "rubbish''.
"You know, I spent my whole f***ing life building up my reputation on my name and for someone to walk into my life and try and do that, hell no.''
He said he had "sweated blood'' to build up his reputation and was not about to let Michaels ruin it.
Lomu said he ended up walking away from the deal.
''... I kept seeing all these people walking in and out, being disgusted in terms of they've never - they haven't been paid, they haven't been delivered whatever it was, then I sort of knew, okay something's up here.''
Michaels is also alleged to have used Lomu's name when buying luxury Taupo apartments and duped investors into thinking he was planning a takeover of SkyCity, the court has heard.
In her opening address, Crown prosecutor Christine Gordon told of Michaels' attempts to buy 12 apartments at Sacred Waters, a luxury lakeside complex in Taupo.
Ms Gordon said Michaels stayed at the apartments under the name Michael Callis and struck up a business relationship with co-owner Janet Jackson.
She said Ms Jackson believed Michaels was a wealthy man who wore gold jewellery, Rolex watches and drove late-model BMWs.
He persuaded Ms Jackson to help him buy 12 apartments at the complex. She would buy them from her co-owners and then sell them to Michaels.
Ms Gordon said Michaels told her his money was in a Belgian bank account and his backers needed some security. He convinced her to make several payments worth more than $350,000 to ensure the sales.
Michaels also told Ms Jackson to change the name on the sale and purchase agreement to Jonah Lomu, Ms Gordon said.
"Note that Jonah Lomu did not authorise his name to be used."
Ms Jackson was not Michaels' only alleged victim, Ms Gordon said.
The trial before Judge Christopher Field alone, is due to end late next month and hear from 50 witnesses.