The Legacy Cares bond fraud stands as the largest conduit bond fraud case in United States history. Between 2020 and 2021, approximately $284 million in municipal bonds were issued through the Industrial Development Authority of Arizona to finance a sprawling sports complex in Mesa, Arizona. Investors who purchased those bonds lost more than 99% of their money, recovering less than $2.5 million from bankruptcy proceedings. The individuals behind the scheme have since been criminally charged and have pleaded guilty to securities fraud.
This page examines what happened, why the fraud succeeded for as long as it did, and what municipal bond investors should understand about the structural risks embedded in conduit bond offerings.
Key Takeaways
- Legacy Cares issued $284 million in conduit bonds through the Arizona Industrial Development Authority in 2020 and 2021 to build a sports complex in Mesa, Arizona.
- The bond offering was built on fabricated letters of intent and forged contracts. The majority of the 50 documents attached to the offering memorandum were fraudulent.
- Bonds defaulted in October 2022 and Legacy Cares filed for Chapter 11 bankruptcy in May 2023. Investors recovered less than $2.5 million of the $284 million owed.
- Randall “Randy” Miller and his son Chad Miller pleaded guilty to securities fraud and aggravated identity theft in federal court.
- Major fund companies including Vanguard, PIMCO, and AllianceBernstein have filed lawsuits against the underwriter, bond counsel, and the individuals involved.
What Was Legacy Cares?
Legacy Cares, Inc. was an Arizona nonprofit corporation founded by Randall “Randy” Miller. The organization’s stated mission was to build and operate a 320-acre multi-sports park and family entertainment center in Mesa, Arizona, near Queen Creek. The facility was known at various times as Legacy Sports Park and, after a naming rights agreement, as Bell Bank Park.
Construction broke ground in October 2020. The complex opened to the public in January 2022 with a grand opening on February 4, 2022. The project was financed entirely through two municipal bond offerings:
| Bond Offering | Date | Amount | Conduit Issuer |
|---|---|---|---|
| Series 2020 | August 2020 | $250.8 million | Industrial Development Authority of Arizona |
| Series 2021 | June 2021 | $33 million | Industrial Development Authority of Arizona |
Both offerings were unrated, meaning no credit rating agency (Moody’s, S&P, or Fitch) assessed the creditworthiness of the bonds before they were sold to investors. This is a significant red flag that many investors failed to recognize.
How the Legacy Cares Bond Fraud Worked
According to the SEC’s complaint filed in April 2025, the fraud was built on fabricated documentation. The offering memorandum provided to investors included approximately 50 letters of intent and contracts from sports clubs, leagues, and other organizations that supposedly committed to using the sports complex. The SEC alleges that the majority of these documents were either entirely fabricated or materially altered with forged signatures.
Among the fabricated documents were letters of intent purportedly from high-profile organizations, including an affiliate of Manchester United and a youth program connected to Major League Soccer’s Real Salt Lake. These fake commitments were used to generate revenue projections that appeared to show the complex would easily generate enough income to service the bond debt.
Warning for Bond Investors: Revenue projections in conduit bond offerings are only as reliable as the documentation supporting them. The Legacy Cares case demonstrates that offering memoranda can contain fabricated documents that inflate revenue expectations to make an investment appear far safer than it actually is.
The Key Participants
The SEC and DOJ named three individuals in connection with the Legacy Cares bond fraud:
Randall “Randy” Miller
Age 70, Phoenix, Arizona. Founder, Chairman, and Managing Member of Sports USA. Founder of Legacy Cares. Received approximately $230,000 from bond proceeds. Pleaded guilty to securities fraud and aggravated identity theft.
Chad J. Miller
Age 41, son of Randy Miller. CEO of Sports USA. Paid himself more than $30,000 per month after the fraudulent bond offerings. Pleaded guilty to securities fraud and aggravated identity theft.
A third individual, Jeffrey De Laveaga, the COO of Sports USA, was also charged by the SEC. De Laveaga received a consulting fee of more than $20,000 in connection with the scheme. The SEC reached partial settlements with defendants in the case.
Timeline: From Bond Offering to Criminal Charges
| Date | Event |
|---|---|
| August 2020 | First bond offering raises $250.8 million through Arizona IDA |
| October 2020 | Construction begins on 320-acre sports complex |
| June 2021 | Second bond offering raises $33 million |
| January 2022 | Sports complex opens with far fewer events and attendance than projected |
| October 2022 | Legacy Cares defaults on both bond series |
| April 2023 | Bell Bank terminates naming rights agreement |
| May 2023 | Legacy Cares files Chapter 11 bankruptcy |
| October 2023 | Facility sold for $26 million; bondholders receive $2.4 million |
| September 2024 | Vanguard, AllianceBernstein, PIMCO file civil lawsuit in Maricopa County |
| April 2025 | SEC and DOJ file charges against Randy Miller, Chad Miller, and Jeffrey De Laveaga |
| 2025 | Randy and Chad Miller plead guilty to securities fraud |
The Catastrophic Losses: What Investors Lost
The financial damage to bondholders was devastating. When Legacy Cares filed for bankruptcy and the sports complex was sold, the distribution to bondholders was a fraction of what they were owed:
$284 Million
Total bonds issued to investors in the two offerings
Less Than $2.5 Million
Amount recovered by bondholders from bankruptcy proceedings
99%+ Loss
Percentage of principal lost by investors who held these bonds
The facility was ultimately sold for approximately $26 million in bankruptcy court. Of that amount, bondholders received $2.4 million in cash plus an 11% equity stake in the acquiring company. For investors who committed $284 million based on fraudulent revenue projections, this recovery was almost negligible.
Why Major Fund Companies Are Suing
Institutional investors were among the largest holders of Legacy Cares bonds. Vanguard Group, AllianceBernstein, Voyageur, and PIMCO filed a lawsuit in Maricopa County Superior Court in Arizona against multiple parties connected to the bond offerings. A separate suit was filed by Saybrook Fund Advisors. The two cases have been consolidated.
The civil lawsuits name the following defendants beyond the Millers:
- B.C. Ziegler & Company: The Chicago-based bond dealer that served as underwriter for the $284 million in bond offerings.
- Gust Rosenfeld: The law firm that served as bond counsel on the securities issued through the Arizona Industrial Development Authority.
Why underwriters and bond counsel matter: In municipal bond offerings, the underwriter and bond counsel serve as gatekeepers. The underwriter is responsible for conducting due diligence on the offering, and bond counsel provides legal opinions on the validity and tax status of the bonds. When these parties fail to identify fabricated documents in an offering memorandum, investors lose a critical layer of protection.
The Conduit Bond Problem: Why This Fraud Was Possible
The Legacy Cares bond fraud exposes a structural vulnerability in the municipal bond market: the conduit bond issuance model. Unlike general obligation bonds backed by a municipality’s taxing power, conduit bonds are issued by a government authority on behalf of a private borrower. The government entity acts as a pass-through, lending its tax-exempt status to the borrower without assuming any obligation to repay bondholders if the borrower defaults.
In this case, the Industrial Development Authority of Arizona issued the bonds on behalf of Legacy Cares. The Authority had no obligation to repay investors when Legacy Cares defaulted. This structure creates a dangerous gap:
- The conduit issuer has no financial skin in the game. It collects fees for issuing the bonds but bears no repayment risk.
- Investors may assume municipal backing exists when it does not. The words “Industrial Development Authority” suggest government involvement, but the bonds carry no government guarantee.
- Oversight is minimal. Conduit issuers often perform limited due diligence on the borrower’s ability to repay.
- Credit ratings may be absent. Both Legacy Cares offerings were unrated, meaning no independent agency assessed the borrower’s creditworthiness.
This case validates longstanding concerns about the lack of adequate oversight in conduit bond issuance. The Municipal Securities Rulemaking Board (MSRB) sets standards for broker-dealers and municipal advisors, but its rules do not extend to issuers of municipal securities themselves. This regulatory gap allowed Legacy Cares to issue nearly $300 million in bonds backed by fabricated documentation.
SEC and DOJ Enforcement Actions
The federal response to the Legacy Cares bond fraud came through two parallel enforcement actions:
SEC Civil Action
The SEC filed its complaint in the U.S. District Court for the Southern District of New York, charging Randall Miller, Chad Miller, and Jeffrey De Laveaga with violations of:
- Section 17(a) of the Securities Act of 1933
- Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
The SEC seeks permanent injunctions, conduct-based injunctions, disgorgement with prejudgment interest, and civil penalties against all three defendants.
Criminal Prosecution
The U.S. Attorney’s Office for the Southern District of New York obtained criminal indictments against Randy and Chad Miller. Both pleaded guilty to one count of securities fraud, which carries a maximum sentence of five years in prison, and one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years. Sentencing dates are pending.
Red Flags Investors Should Have Seen
In hindsight, the Legacy Cares bond offering had several warning signs that should have prompted closer scrutiny:
No Credit Rating
Both bond series were unrated. Legitimate large-scale bond offerings typically seek credit ratings from at least one major agency. The absence of a rating means no independent party assessed whether the borrower could service the debt.
Inflated Revenue Projections
Revenue projections were multiple times the amount needed to cover bond payments. When projected returns appear unusually generous, the underlying assumptions deserve heightened scrutiny.
Nonprofit Borrower, For-Profit Operations
Legacy Cares was a nonprofit, but the Millers operated for-profit entities (Sports USA) that extracted significant compensation from bond proceeds.
Conduit Structure with No Municipal Backing
The bonds carried no government guarantee. The Industrial Development Authority of Arizona had no obligation to repay investors if Legacy Cares defaulted.
What Bond Fraud Victims Can Do
If you invested in Legacy Cares bonds or other conduit bond offerings that have defaulted or lost significant value, several legal avenues may be available:
- FINRA arbitration: If a broker-dealer recommended the bonds to you without adequate due diligence or proper disclosure of risks, you may have a claim through FINRA arbitration.
- Claims against underwriters: Underwriters have a duty to conduct reasonable due diligence before selling bonds to investors. Failure to identify fabricated documents in an offering may constitute a violation of securities laws.
- Suitability claims: Unrated conduit bonds carry significantly higher risk than investment-grade municipal bonds. If your broker recommended them without ensuring they matched your risk tolerance and investment objectives, that recommendation may have been unsuitable.
- State securities law claims: Depending on where you reside, state securities statutes may provide additional remedies for bond fraud victims.
Time limits apply: Securities fraud claims are subject to statutes of limitations and FINRA eligibility rules. Investors who suffered losses should consult with a securities attorney promptly to understand their rights and available deadlines for filing claims.
Lessons for Municipal Bond Investors
The Legacy Cares bond fraud offers several critical lessons for anyone who invests in or considers investing in municipal bonds, particularly conduit bond offerings:
- Understand the issuer structure. Know the difference between general obligation bonds (backed by taxing authority) and conduit bonds (backed only by the borrower’s revenue). The conduit issuer has no obligation to repay you.
- Demand credit ratings. Unrated bonds lack the independent assessment that rated bonds provide. Treat the absence of a credit rating as a material risk factor.
- Verify revenue projections independently. Do not rely solely on documents provided in the offering memorandum. The Legacy Cares case shows that these documents can be fabricated entirely.
- Scrutinize the borrower’s track record. Does the organization have a history of successfully operating the type of facility being financed? New ventures funded by conduit bonds carry elevated risk.
- Review underwriter and counsel qualifications. The professionals involved in a bond offering should have relevant experience and a clean regulatory history.
Frequently Asked Questions
What was the Legacy Cares bond fraud?
Legacy Cares bond fraud refers to a scheme in which approximately $284 million in municipal bonds were issued through the Arizona Industrial Development Authority to finance a sports complex in Mesa, Arizona. The individuals behind Legacy Cares fabricated letters of intent and contracts to inflate revenue projections, making the investment appear far safer than it was. The bonds defaulted in October 2022, and investors recovered less than $2.5 million of the $284 million owed.
Who was charged in the Legacy Cares case?
The SEC charged Randall “Randy” Miller (founder of Legacy Cares), his son Chad Miller (CEO of Sports USA), and Jeffrey De Laveaga (COO of Sports USA) with securities fraud. Randy and Chad Miller also face criminal charges and have pleaded guilty to securities fraud and aggravated identity theft in federal court.
What is a conduit bond and why is it risky?
A conduit bond is a municipal bond issued by a government authority on behalf of a private borrower. The government entity acts as a pass-through for tax-exempt status but has no obligation to repay bondholders if the borrower defaults. This means investors are relying entirely on the borrower’s ability to generate revenue, with no government safety net. The Legacy Cares case illustrates the danger when adequate oversight of the borrower is lacking.
Can investors who lost money in Legacy Cares bonds recover their losses?
Investors may have legal claims depending on the circumstances of their purchase. If a broker-dealer recommended the bonds without proper due diligence or adequate risk disclosure, claims may be pursued through FINRA arbitration or civil litigation. Claims may also exist against underwriters and other parties involved in the offering. Time limits apply, so consulting with a securities attorney promptly is advisable.
Why did major fund companies like Vanguard and PIMCO sue?
Vanguard, PIMCO, AllianceBernstein, and other institutional investors filed lawsuits in Maricopa County Superior Court because they allege they were defrauded by the fabricated documentation used in the bond offerings. Their lawsuits target the underwriter (B.C. Ziegler), bond counsel (Gust Rosenfeld), and the individual defendants for their roles in the fraud.
How does the Legacy Cares case affect other conduit bond investors?
The case highlights systemic risks in the conduit bond market. Conduit issuers perform limited oversight of borrowers, credit ratings may be absent, and investors may mistakenly believe government backing exists when it does not. Any investor holding conduit bonds should review the underlying documentation and borrower financials carefully, and consider whether their broker fulfilled their suitability and due diligence obligations.
Protect Your Bond Investments
Lost Money in Legacy Cares Bonds or Another Conduit Bond Offering?
Attorney Gary Varnavides spent 10 years defending broker-dealers at Sichenzia Ross Ference LLP before founding Varnavides Law, PC to represent investors. That insider experience means we understand how these products are sold, how due diligence should work, and where the failures occurred. If you suffered losses in Legacy Cares bonds or any conduit bond investment, we can evaluate your options at no cost.
Prior results do not guarantee a similar outcome. This page is for informational purposes and does not create an attorney-client relationship.
