A significant legal development has unfolded as authorities in the United States have taken action against individuals involved in a municipal bond fraud case tied to an Arizona sports complex. The U.S. Attorney’s Office for the Southern District of New York and the Securities and Exchange Commission (SEC) announced charges on Tuesday concerning two municipal bond offerings exceeding $280 million. These funds were intended to finance the construction of a sports complex but ultimately led to default and bankruptcy. According to the SEC, the matter revolves around a fraudulent scheme involving fabricated documents used to mislead investors about the revenue-generating potential of the project. Key figures named in the legal proceedings include Randall Miller, Chad Miller, and Jeffrey De Laveaga, accused of violating federal securities laws.
Investigations revealed that the bonds, issued for Legacy Cares—an Arizona nonprofit corporation—were offered in August 2020 and June 2021. The total amount raised was approximately $284 million, all of which has since defaulted. The SEC complaint, filed in the U.S. District Court for the Southern District of New York, seeks several forms of penalties, including permanent injunctions, disgorgement with prejudgment interest, and civil penalties. Antonia Apps, acting deputy director of the SEC’s Division of Enforcement, emphasized the importance of maintaining integrity within the vast municipal bond market, valued at roughly $4 trillion, stating that accountability is crucial for both local governments and investors.
In tandem with the SEC's actions, Matthew Podolsky, the acting U.S. Attorney for the Southern District of New York, and Christopher G. Raia from the FBI unveiled an indictment against Randy Miller and his son Chad Miller. Both are former executives of Legacy Sports and are charged with orchestrating a scheme to defraud investors in the muni bond offerings linked to Legacy Cares. Following an initial payment default in January 2023, the project filed for Chapter 11 bankruptcy by May 2023. Unfortunately, bondholders received minimal compensation from the sale of the sports complex through the bankruptcy court.
Randy and Chad Miller were arrested on Tuesday and are scheduled to appear in court on Wednesday in the U.S. District Court for the District of Arizona. This high-profile case underscores the necessity for vigilance and transparency in the municipal bond market, where trust between issuers and investors remains paramount. As legal proceedings progress, they will undoubtedly serve as a cautionary tale for future endeavors in this financial sector.