If You Build It, Chumps Will Come
A father-and-son team fleeced municipal bond investors out of more than $280 million with an Arizona sports-park nightmare
“Hey! Is This Heaven?” – Shoeless Joe Jackson in “Field of Dreams.”
Randy and Chad Miller never made it past the minor leagues as baseball players, but as flim-flam sports-park developers they conned their way into the major leagues of fraud.
The father-and-son team duped sophisticated investment giants — including Vanguard, PIMCO, AllianceBernstein, and Macquarie Group’s Delaware Investments — in a $284 million bond deal.
None of them suspected this bond offering was based on forged signatures, incorrect letterhead, and the kind of spelling errors that would embarrass a middle-school student.
The Millers somehow snookered the embarrassingly credulous Arizona Industrial Development Authority into issuing bonds for a 320-acre sports park in Mesa, Ariz., that couldn’t possibly live up to its hype.
The authority reportedly got $1 million for facilitating the project and Chicago-based investment bank Ziegler got $5 million to underwrite the deal.
Tax-exempt bonds? Check. Professional underwriters? Check. A glossy investor deck full of stock photos of smiling kids in Under Armour? Double check.
The Millers’ Legacy Park sports complex opened in January 2022 but it became Liability Park just nine months later as it defaulted on its bond payments. And the true legacy here is one of the biggest investment frauds in Arizona history.
Squandering the state’s credit rating
It’s no wonder the Arizona Industrial Development Authority has a BBB-rating, just a notch above junk.
Incredibly, Patrick Ray, who ran the authority’s bond program, has said he didn’t want to put developers through pesky background checks so that they could have a more “user friendly” experience.
Yep. the authority was certainly “friendly” to “users.”
Legacy Park was built on a dusty desert floor that had served as a testing ground for General Motors vehicles in a city of about a half million people. It’s a family-friendly Disneyland of sweat with expansive fields, courts and arenas for baseball, football, soccer, volleyball, pickleball, basketball, e-sports, CrossFit and more.
But the complex filed bankruptcy in May 2023, screwing unpaid contractors out of millions. As for bondholders, they only recouped less than $2.5 million out of the $284 million issued in two bogus bond offerings.
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No one was on the ball
The Millers forged letters of intent and other documents to make it look like they had a full roster of customers. Some of these documents were so obviously fake, it’s a wonder the bond offering went to market.
A Securities and Exchange Commission complaint notes that some documents had misspelled signatories as well as outdated letterhead.
Didn’t anybody call one of these potential customers to see if they indeed wrote these letters? And didn’t anybody consider the weather?
To meet their projections, the Millers promised their sports park, which is about 80% outdoors, would be nearly fully booked year-round from opening day. But a quick internet search would inform any fool that Mesa temperatures surpass 100 degrees more than 110 days a year.
But it’s a dry heat. Pickleball anyone?
Municipal bonds are supposed to be safe
Randy Miller, 70, and Chad Miller, 41, pleaded guilty to securities fraud and aggravated identity theft in May and were sentenced to prison on Tuesday.
Daddy got six years and is ordered to return nearly $7.3 million in ill-gotten gains. His nepo baby got five years and is ordered to return nearly $4.8 million.
“Their scheme undermined confidence in the $4 trillion+ municipal bond market that communities across America depend on to finance essential projects,” said U.S. Attorney Jay Clayton in a press release.
Indeed, who can be confident in municipal bond offerings when a state bonding authority and big-name investment groups can be this gullible?
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