False Revenue Projections at Heart of $284 Million Bond Fraud
The U.S. Securities and Exchange Commission (SEC) has filed charges against Randall “Randy” Miller, Chad Miller, and Jeffrey De Laveaga, accusing them of orchestrating a deceptive municipal bond scheme involving fabricated financial documents. The scheme allegedly misled investors in two separate bond offerings that raised a combined $284 million to fund a massive sports and entertainment complex in Mesa, Arizona.
Massive Bond Offering Tied to Nonprofit Entity
According to the SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, the fraudulent activities trace back to a nonprofit organization, Legacy Cares, led by Randy Miller. In August 2020 and June 2021, Legacy Cares issued roughly $284 million in municipal bonds through a state entity in Arizona. The funds were meant to finance a sprawling, multi-sports park and family entertainment facility.
Investors were told they would be repaid using revenue generated by the sports complex. To instill confidence, they were presented with financial projections indicating that revenue would far exceed what was needed to service the bond debt. However, the SEC claims these projections were built on a foundation of deception.
Fake Contracts and Letters of Intent Used to Mislead Investors
The SEC alleges that Miller, Chad Miller, and De Laveaga created or altered critical documents to support overly optimistic revenue forecasts. These included contracts and letters of intent purportedly signed by sports leagues, clubs, and entertainment organizations that intended to use the facility. In reality, many of those agreements were fabricated or materially misrepresented.
These falsified documents gave investors a false sense of security about the project’s financial viability. When the sports complex opened in January 2022, it fell dramatically short of expectations. The number of events held was significantly lower than projected, attendance was sparse, and actual revenue was tens of millions less than what had been forecasted using the fraudulent documents.
Bond Default Highlights Collapse of the Scheme
Despite initial investor enthusiasm, the financial reality soon became apparent. The facility’s lackluster performance led to a shortfall in revenue, making it impossible to meet the bond repayment obligations. By October 2022, just months after the facility began operations, the bonds defaulted, triggering significant financial losses for investors.
SEC Enforcement Action Aims to Protect Municipal Bond Market
Antonia Apps, Acting Deputy Director of the SEC’s Division of Enforcement, emphasized the importance of integrity in the municipal bond market, which is valued at approximately $4 trillion.
“As our complaint alleges, these defendants used fake documents to deceive municipal bond investors into believing a sports complex would generate more than enough revenue to make payments to bondholders,” Apps stated. “Maintaining the integrity of the municipal bond market is critical for local governments and investors alike. The SEC will hold accountable individuals who defraud municipal bond investors.”
The charges brought against the trio include violations of the antifraud provisions of federal securities laws. The SEC is seeking permanent injunctions, conduct-based restrictions, disgorgement of ill-gotten gains with interest, and civil penalties.
Parallel Criminal Charges Filed by Federal Prosecutors
In a parallel development, the U.S. Attorney’s Office for the Southern District of New York also announced criminal charges related to the same misconduct. This dual approach—civil enforcement by the SEC and criminal prosecution by federal authorities—highlights the seriousness of the alleged fraud.
Municipal Bond Fraud Cases on the Rise
This case adds to a growing list of enforcement actions targeting fraud in the municipal bond market. As municipalities increasingly rely on these bonds for public infrastructure projects, maintaining investor trust is paramount. Regulatory agencies have stepped up scrutiny in recent years, responding to concerns that fraud and mismanagement could erode confidence in this vital funding channel. Investors and promotors should contact Sallah Astarita & Cox, LLC for representation in these cases. 212-509-6544.
The Fallout from Deceptive Fundraising Practices
Investors who participated in the bond offerings were left with significant losses, and questions remain about the due diligence conducted prior to the issuance. The Legacy Cares project now stands as a cautionary tale of how investor trust can be undermined by manipulated documentation and inflated projections.
Legal observers expect the case to be closely watched, not only because of the size of the offering but also due to its implications for nonprofit entities involved in public-private projects. The combination of civil and criminal charges also signals that regulators and prosecutors are prepared to collaborate more aggressively to tackle securities fraud.
SEC Continues Crackdown on Securities Law Violations
As this case moves through the court system, it underscores the SEC’s ongoing commitment to rooting out fraud in all corners of the financial markets—including the often-overlooked municipal bond sector. The Commission’s actions serve as a warning to those considering deceptive practices: regulatory scrutiny is intensifying, and accountability will follow.
Editor’s Note: Readers are reminded that the SEC often over-charges, and ultimately backs down on its charges once a target mounts a defense. Unless the release indicates that the respondent has settled the charges, these are the SEC’s allegations, not evidence of wrongdoing. The respondent has not yet had the opportunity to present evidence or to counter the allegations contained in the SEC Press Release.
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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.
