(Bloomberg) -- A father and son from Phoenix pleaded guilty to defrauding several of the nation’s biggest investment firms about the business prospects of a failed Arizona sports complex that wound up costing municipal bondholders more than $280 million.
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Randy Miller, 70, and his son Chad, 40, entered their pleas Wednesday to securities fraud and aggravated identity theft in Manhattan federal court. Victims of the scheme included Vanguard Group Inc., AllianceBernstein Holding LP, Macquarie Group’s Delaware Funds and others firms that invested in bonds linked to their Legacy Park development in Mesa.
The Millers were charged last month with using fabricated letters of intent and fake pre-contracts to claim that various organizations were lined up to use the park. Bloomberg had reported that the pair claimed in bond prospectuses that they had deals with British soccer powerhouse Manchester United and a youth affiliate of US Major League Soccer’s Real Salt Lake. Those teams and others later denied signing up with the pair.
As part of the men’s plea agreements, prosecutors agreed not to contest a sentence of less than seven years and a fine of $40,000 to $400,000. Randy Miller agreed to forfeit about $7.3 million, while Chad, a former minor-league baseball player, will give up about $4.8 million.
The pair had failed to find financing for their project for years before they turned to revenue-backed municipal bonds through the Arizona Industrial Development Authority, avoiding the scrutiny and regulations attached to corporate stocks and bonds.
The 320-acre complex, which had fields and courts for sports including baseball and soccer, opened in January 2022 but never made enough to cover a single bond payment and defaulted later that year. A nonprofit set up by the Millers to own the complex filed for bankruptcy in May 2023, saying construction setbacks, labor shortages and supply-chain delays amid the pandemic delayed the park’s opening and cost revenue.
Legacy Park was sold in October for $26 million, with bondholders receiving $2.4 million in cash and an 11% equity stake in the new owners.
The case is US v. Miller, 25-cr-138, US District Court, Southern District of New York (Manhattan).
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