Army financial counselor robbed millions from Gold Star families

A Monmouth County financial counselor with the United States Army and major in the U.S. Army Reserves who allegedly defrauded two dozen Gold Star families has been indicted.

U.S. Attorney Philip R. Sellinger announced that Caz Craffy, a/k/a “Carz Craffey,” 41, of Colts Neck, New Jersey, is charged by indictment with six counts of wire fraud and one count each of securities fraud, making false statements in a loan application, committing acts furthering a personal financial interest, and making false statements to a federal agency.

The charges follow a Washington Post report from February detailing the allegations from four military families who said Craffy strip-mined their accounts through trades that earned him thousands of dollars in commissions, often executed without their consent or consultation.

Craffy is expected to make his initial appearance today before U.S. Magistrate Judge Tonianne J. Bongiovanni at the Trenton Federal Courthouse. Craffy’s Army employment ended Jan. 4, said Matt Leonard, a spokesperson for the military.

Natalie Khawam, an attorney for three victimized families, and Marc Fitapelli, who is representing a fourth survivor, are preparing to file lawsuits against Craffy, Monmouth Capital Management, and other businesses associated with him or former employers.

“Stealing from Gold Star families whose loved ones made the ultimate sacrifice in service to our nation is a shameful crime,” said Attorney General Merrick B. Garland. “As alleged in the indictment, the defendant in this case used his position as an Army financial counselor to defraud Gold Star families, steal their money, and enrich himself. Predatory conduct that targets the families of fallen American service members will be met with the full force of the Justice Department.”

“The families of our fallen service members have laid the dearest sacrifice on the altar of freedom,” said U.S. Attorney Philip R. Sellinger. “These Gold Star families deserve our utmost respect and compassion, as well as some small measure of financial security from a grateful nation. They must be off-limits for fraudsters.” “

“But, as the indictment alleges, this defendant took advantage of his role as an Army financial counselor to prey upon these families, using lies and deception to steer their investments in a way that would make him money,” said Sellinger. “There is no room for those who seek to rip off families of fallen servicemembers to make a buck. We will use every means at our disposal to ensure that those who defraud military families are held accountable.”

Statements from government officials laced with self-congratulatory comments were disputed by experts who say that the scammer should never have been able to get away with these crimes.

“The Army certainly should have been aware this person was working two full-time jobs,” said Katherine L. Kuzminski, a military policy expert at the Center for a New American Security, emphasizing that it is the service that is responsible for guaranteeing that life insurance beneficiaries “receive ethical treatment.”

Financial counseling is a good idea, in theory, Kuzminski added, but only if the highest standards can be enforced “to ensure families, who financial advisers are set up to protect in the first place, are truly protected and not taken advantage of.”

On April 8, 2022, Craffy purchased a 6 bedroom and 5½ baths home with over 2.5 acres, a 2-story pool house, large SW pool, on a private development within the Colts Neck Golf Course at 4 Country Club Lane for $2.1 million.

“Those who prey on the family members of fallen soldiers, will be sought out and held accountable,” said Special Agent in Charge Joel Kirch, Department of the Army Criminal Investigation Division, Northeast Field Office. “

“The families of service members who lost their lives while serving their country deserve to be treated with compassion, dignity and respect by individuals entrusted to assist them in obtaining survivor benefits,” said James R. Ives, Principal Deputy Director of the Defense Criminal Investigative Service, the law enforcement arm of the DoD Office of Inspector General. 

“Gold Star families are given a title no one would choose because it means they’ve paid the ultimate sacrifice for this country,” said Special in Charge James E. Dennehy of the Newark FBI. “The soldier, sailor, marine or airman they loved died during a time of conflict – defending this nation. They are given money and assistance to help ease the burden that comes with losing their loved one, however no amount of money can replace what they’ve lost. We allege Craffy took advantage of his position and defrauded families already going through a tremendous amount of suffering.”

“Craffy disgraced the position he was entrusted in to care for our nation’s military families when he allegedly took advantage of them during a vulnerable time of grief,” said Homeland Security Investigations Newark Special Agent in Charge Ricky J. Patel. “No family, especially our Gold Star families, should have to face further heartache after a loved one’s death by having their financial security ripped out from under them by fraudsters.”

According to documents filed in this case and statements made in court, when a member of the Armed Services dies during active duty, his or her surviving beneficiary, now a member of a Gold Star family, is entitled to a $100,000 death gratuity and the soldier’s life insurance of up to $400,000.

These payments are disbursed to the beneficiary in a matter of weeks or months following the servicemember’s death.

To assist the beneficiaries in this time of need, the military provides a number of services to the servicemember’s family, including the assistance of a financial counselor. 

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 was also a major in the U.S. Army Reserves, where he has been enlisted since 2003. Craffy was responsible for providing general financial education to the surviving beneficiaries. He was prohibited from offering any personal opinions regarding the surviving beneficiary’s benefits decisions.

Craffy was not permitted to participate personally in any government matter in which he had an outside financial interest. However, without telling the Army, Craffy simultaneously maintained outside employment with two separate financial investment firms.

Craffy used his position as an Army financial counselor to identify and target Gold Star families and other military families. He encouraged the Gold Star families to invest their survivor benefits in investment accounts that he managed in his outside, private employment.

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.

During the timeframe of the alleged scheme, the Gold Star family accounts had lost more than $3.4 million, while Craffy personally earned more than $1.4 million in commissions, drawn from the family accounts.

The wire fraud and securities fraud charges are each punishable by a maximum of 20 years in prison. The charge of submitting a false statement on a loan application is punishable by a maximum of two years in prison.

The charges of acts affecting a personal interest and false statements to a federal agent are each punishable by five years in prison.

All counts but the securities fraud count are also punishable by a maximum fine of either $250,000 or twice the gain or loss from the offense, whichever is greatest. The securities fraud count is punishable by a maximum fine of either $5 million or twice the gain or loss from the offense, whichever is greatest.

The U.S. Securities and Exchange Commission (SEC) also filed a civil complaint against Craffy today based on the same and additional conduct.

“Rather than help Gold Star families best use their survivor benefits, we allege that Mr. Craffy manipulated them to profit from their grief,” said Gurbir S. Grewal, Director of the SEC’s Enforcement Division. “We owe an incredible debt of gratitude to these families who have sacrificed so much in service to our country.”

According to the SEC’s complaint, Craffy, of Colts Neck, New Jersey, was permitted to provide general financial education to service members’ families through his job as a U.S. Army financial counselor.

However, as alleged, between May 2018 and November 2022, Craffy used his position and access to manipulate grieving family members by directing them to transfer their benefits into brokerage accounts he managed outside of his official duties with the U.S. Army.

Once the funds were deposited, Craffy engaged in unauthorized trading and trading that did not match his customers’ risk profiles and investment objectives and exposed them to higher risks of loss from excessive trading, concentration and lack of diversification.

In that 54-month span, Craffy’s customers incurred more than $1.64 million in commissions and fees, most of which Craffy pocketed, while the accounts he managed suffered approximately $1.79 million in realized losses and faced additional unrealized losses of approximately $1.8 million.

In one particularly egregious offense, Craffy misappropriated $50,000 from the IRA account of a minor child whose parent had died on active duty.

Craffy has been permanently prohibited from association with any member of the Financial Industry Regulatory Authority Inc. (FINRA).