U.S. Securities and Exchange Commission Litigation Release No. 26280, dated April 2, 2025.
The SEC charged three individuals for defrauding investors in municipal bond offerings that raised $284 million to build a sports complex. The defendants allegedly fabricated or altered documents, including letters of intent and contracts, to inflate revenue projections. The sports complex ultimately failed to generate sufficient revenue, leading to bond default.
In Plain English
Imagine you want to build a big sports park and need money. You tell people you'll borrow money by selling special IOUs called bonds. To convince people to buy these IOUs, you show them fake promises from sports teams saying they'll use the park a lot. Based on these fake promises, you make up numbers showing how much money the park will make, making it seem like a sure thing. But when the park opens, it doesn't get many events, doesn't make the promised money, and the people who bought the IOUs don't get paid back.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Founding a Nonprofit for a Sports Complex In August 2020 and June 2021, Randall "Randy" Miller founded a nonprofit company called Legacy Cares to issue municipal bonds. These bonds were intended to raise approximately $284 million to finance the construction of a large multi-sports park and family entertainment center in Mesa, Arizona.
- Issuing Bonds Through a Conduit Issuer Legacy Cares used the Arizona Industrial Development Authority, a state entity acting as a "conduit issuer," to issue the municipal bonds. These were revenue bonds, meaning investors were to be repaid from the revenue generated by the Sports Complex itself once it opened.
- Creating Inflated Financial Projections To market the bonds, financial projections were created that showed revenues far exceeding the amount needed to pay investors. These projections were prepared at the direction of Randy Miller's son, Chad Miller, with input from Jeffrey De Laveaga, an executive at the operating company, Legacy Sports USA, LLC.
- Fabricating Letters of Intent The financial projections were purportedly supported by dozens of "letters of intent" attached to the offering documents. These letters, supposedly from sports clubs and leagues, indicated their intent to use the sports complex. However, the SEC alleges that the majority of these over 50 letters were fabricated or materially altered, including forged signatures, by Randy Miller, Chad Miller, and De Laveaga.
- Creating Fake Pre-Contracts In addition to the letters of intent, the defendants allegedly created a set of 25 "pre-contracts." These documents, also provided to investors via an online data room, were represented as binding arrangements for entities to use the Sports Complex and pay fees. Most of these pre-contracts were also fake.
- Misleading Investors with False Documents The offering memoranda for both the 2020 and 2021 bond offerings incorporated these false projections, fabricated letters of intent, and fake pre-contracts. The defendants allegedly knew or were reckless in not knowing these documents were false and would be disseminated to investors.
- Sports Complex Opens Below Expectations The Sports Complex opened in January 2022. However, it hosted far fewer events and had much lower attendance than projected in the offering documents. The complex generated less than $28 million in revenue in its first year, significantly short of the $96 million projected.
- Bond Default and Bankruptcy Due to the substantial revenue shortfall, Legacy Cares defaulted on both the 2020 and 2021 bonds in October 2022 when payments were due. Legacy Cares subsequently filed for bankruptcy in May 2023.
The Enforcement Action
On April 1, 2025, the SEC filed a complaint in the U.S. District Court for the Southern District of New York against Randall J. Miller, Chad J. Miller, and Jeffrey De Laveaga. The SEC seeks permanent injunctions, conduct-based injunctions, disgorgement with prejudgment interest, and civil penalties for violations of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.