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Regulation and Compliance > Litigation

Broker Who Defrauded Gold Star Families Gets 12 Years in Prison

By Melanie Waddell

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A former New Jersey financial counselor with the U.S. Army who is a major in the Army Reserve was sentenced on Aug. 21 to 151 months in prison for admitted defrauding of Gold Star families and related crimes.

Caz Craffy, aka “Carz Craffey,” 42, of Colts Neck, New Jersey, pleaded guilty on April 16, according to the Department of Justice.

Craffy was charged with six counts of wire fraud and one count each of securities fraud, making false statements in a loan application, committing acts affecting a personal financial interest, and making false statements to a federal agency, the DOJ said.

From November 2017 to January 2023, Craffy was a civilian employee of the U.S. Army, working as a financial counselor with the Casualty Assistance Office. He has been enlisted in the Army Reserve since 2003.

Craffy was responsible for providing general financial education to the beneficiaries of service members killed on active duty, according to DOJ.

While Craffy was prohibited from offering any personal opinions regarding the surviving beneficiaries’ benefits decisions, “without telling the Army, Craffy simultaneously maintained outside employment with two separate financial investment firms,” DOJ said.

Craffy used his position as an Army financial counselor to identify and target Gold Star families and other military families.

“He admitted to encouraging the Gold Star families to invest their survivor benefits in investment accounts that he managed in his outside, private employment,” DOJ said. “Based upon Craffy’s false representations and omissions, the vast majority of the Gold Star families mistakenly believed that Craffy’s management of their money was done on behalf of and with the Army’s authorization.”

From May 2018 to November 2022, Craffy obtained more than $9.9 million from Gold Star families to invest in accounts managed by Craffy in his private capacity.

“Once in control of this money, Craffy repeatedly executed trades, often without the family’s authorization. These unauthorized trades earned Craffy high commissions,” DOJ said.

During the timeframe of the scheme, the Gold Star family accounts lost more than $3.7 million, while Craffy personally earned more than $1.4 million in commissions, drawn from the family accounts, according to DOJ.

Craffy was also sentenced to three years of supervised release and ordered forfeiture of $1.4 million. Restitution will be determined at a later date, DOJ said.

Credit: Adobe Stock

Melanie Waddell

@Think_MelanieW

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