Former US Army Financial Counselor Charged With Defrauding Gold Star Families

Former US Army Financial Counselor Charged With Defrauding Gold Star Families
The U.S. Department of Justice building in Washington on March 21, 2019. (Leah Millis/Reuters)

A former U.S. Army Reserves officer who worked as a financial counselor with the Army was criminally charged on July 7 for defrauding Gold Star families by losing $3.4 million of their investments while he collected $1.4 million in commissions.

The U.S. Department of Justice charged Caz Craffy, 41, of Colts Neck, New Jersey, through a 10-count indictment with wire fraud, securities fraud, and making false statements targeting members of at least two dozen Gold Star families.

Gold Star families are immediate family members of a fallen military service member who died in active duty. This individual’s surviving beneficiary is entitled to a $100,000 death benefit and the fallen soldier’s life insurance of up to $400,000.

Mr. Craffy allegedly tricked family members into handing over hundreds of thousands of dollars of their deceased loved ones’ military benefits.

From May 2018 to November 2022, Mr. Craffy allegedly obtained more than $9.9 million from Gold Star families to invest into private brokerage accounts he controlled, separate from his work for the Army, the Justice Department said.

Mr. Craffy then allegedly made more than 1,000 unauthorized trades in the accounts, eventually losing over $3.4 million while earning more than $1.4 million in commissions that were drawn from the accounts, federal prosecutors said.

“Stealing from Gold Star families whose loved ones made the ultimate sacrifice in service to our nation is a shameful crime,” Attorney General Merrick Garland said in a statement. “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.”

SEC Brings Charges

Mr. Craffy, who has also used the name Carz Craffey, also faces charges from the U.S. Securities and Exchange Commission for violating the antifraud provisions of the federal securities laws and Regulation Best Interest.

“Rather than help Gold Star families best use their survivor benefits, we allege that Mr. Craffy manipulated them to profit from their grief,” Gurbir Grewal, director of the SEC’s Enforcement Division, said in a statement. “We owe an incredible debt of gratitude to these families who have sacrificed so much in service to our country. I am grateful to the SEC staff for holding Mr. Craffy accountable for his shameless conduct and delivering some measure of justice to these incredible families.”

Prosecutors said that Mr. Craffy used his position as a financial counselor with the Army’s Survivor Outreach Services in New Jersey to target the Gold Star families and enroll them in his private venture. Survivor Outreach Services are overseen by the Casualty Assistance Office, which provided long-term support to families of fallen service members.

Many of the families believed Mr. Craffy’s management of their money was on behalf of the Army’s authorization. Once the families transferred funds into brokerage accounts, Mr. Craffy engaged in high-risk trades without family approval and lost them huge sums of money, authorities said.

One widow, who wanted to invest conservatively for her children’s college expenses and for her mother, allegedly lost 60 percent of her $400,000 investment, which Mr. Craffy had said could grow to $1 million in seven years.

Phillip R. Sellinger, U.S. Attorney for the District of New Jersey, said Mr. Craffy sometimes concealed losses by telling victims not to check their account statements.

Another widow, Natasha Bevard, whose husband was a career soldier who died by suicide in 2020, told The Washington Post that she had entrusted Mr. Craffy with about $370,000 to invest conservatively.
“At that time, it didn’t look strange to me,” she told the outlet. “I trusted that this was the process. … I felt he cared.”

Army Was Unaware of Civilian Business

Matt Leonard, a U.S. Army spokesman, told The Washington Post that Mr. Craffy “did not report his other civilian employment to the Army, and the Army did not learn about any other employment until after reviewing a complaint about his actions from a family member.”

The SEC, meanwhile, said that in a “particularly egregious” case Mr. Craffy misappropriated $50,000 from the retirement account of a 13-year-old girl after her father had died.

Mr. Grewal called Mr. Craffy’s alleged fraud “despicable in its reach” and “heartbreaking in its impact,” and expressed hope the charges would send a message to the many others who target military families.

“We see it time and again,” Mr. Grewal said.

Not long before Mr. Craffy’s case, another Army employee was charged with financial crimes.

Young Beom Kim, 62, a former civilian employee at a U.S. Army facility in South Korea, was arrested in May on charges of receiving $400,000 in kickbacks from military contractors, federal prosecutors said.

Mr. Kim oversaw construction contracts at the Army Garrison Yongsan-Casey from 2017 to 2021.

Prosecutors said he made sure contracts for equipment such as blast doors designed to protect Army personnel from an attack went to companies that had paid him kickbacks.

Reuters contributed to this report.