Families of U.S. soldiers who died while on active duty lost nearly $3.5 million to a financial counselor from New Jersey, law enforcement officials said Friday.
Caz Craffy, 41, worked for the U.S. Army when he defrauded two dozen Gold Star families who trusted him to invest their death benefits, U.S. Attorney for New Jersey Philip Sellinger said.
Craffy, a Colts Neck resident, was indicted by a grand jury Thursday in Trenton on 10 counts for allegedly using his position as a U.S. Army financial counselor to fraudulently induce Gold Star families to invest in financial firms he secretly worked for on the side. Once he got control of their money, he allegedly executed numerous trades, often without these families’ authorization. These trades resulted in significant losses to the families totaling more than $3 million. Even though the families lost money, Craffy profited because he received commission payments. In total, he made more than $1 million in commissions from this scheme, law enforcement officials said.
“One individual preyed upon these vulnerable families who were dealing with a tragedy born out of their loved one’s patriotism. An individual who allegedly saw these survivor benefits as a chance to line his own pockets—through lies and deception.,” Sellinger said at a press conference Friday. “Targeting the families of fallen American service members is shameful.”
Craffy was a financial counselor for the U.S. Army. He was a civilian employee who worked at Joint Base Dix-McGuire-Lakehurst. He was also a major in the U.S. Army Reserves.
When active-duty members of the armed forces die, their loved ones receive survivor benefits of up to $500,000. As part of the survivor benefits, the Army assigns a financial counselor like Craffy to provide basic financial education and information to the families of fallen soldiers. Craffy was not permitted to offer advice or opinions about how they should invest their money or with whom. He allegedly did anyway.
In addition to his counselor role, Craffy worked for two outside financial investment firms. He concealed those jobs from the Army and from the Gold Star Families he dealt with, according to the indictment.
Some families were assigned to Craffy and he allegedly specifically targeted others. According to the indictment, he used his position to access military databases, identified service member families who recently lost a loved one, and contacted them directly. Leveraging his relationships with these families, he induced them to invest the survivor benefits with these firms.
He didn’t tell them that the Army was not affiliated with and did not endorse these firms. He also didn’t tell them that he personally would earn commissions from each trade executed by these firms, law enforcement officials said.
As a financial advisor registered with the Financial Industry Regulatory Authority, Craffy had a duty to act in the best interests of the people he advised, officials said. As an Army employee, he was forbidden from giving advice that affected his own financial interests.
Craffy’s misrepresentation and omission to induce the Gold Star families to invest with him was just ta part of his fraud scheme, law enforcement officials said. Despite receiving instructions to invest the survivor benefits conservatively, Craffy induced the victim families to sign pre-filled account opening documents that falsely indicated that they wanted an aggressive investment strategy.
The indictment details how Craffy convinced a widow of a service member to sign pre-filled-out documents with his financial firm. These documents contained several statements that Craffy allegedly knew were false, including that the widow had a net worth of over a million dollars, that she had an aggressive risk tolerance and wanted maximum growth with higher risk, and that she had over five years of investment experience. All these claims were false and Craffy knew it, but he induced the victims into signing the forms because they bought him leeway to make trading decisions for the families with little oversight from the financial firms.
Craffy allegedly routinely failed to get the families’ authorization before causing these trades despite financial firm policies requiring such approval. His trades caused significant losses to these Gold Star Families, law enforcement officials said. When they questioned him about their holdings, Craffy told them not to check their account statements or provided excuses for why their holdings weren’t doing well.
Through his fraud scheme, Craffy caused almost 30 people to transfer a total of about $9.9 million in survivor benefits to accounts he controlled at financial firms. The accounts decreased in value by more than $3.4 million. Craffy personally earned about $1.4 million in commissions that were paid out of the invested funds.
“These Gold Star Families deserve our utmost respect and compassion, as well as some small measure of financial security from a grateful nation. Stealing from them will not be tolerated, and we will use every tool at our disposal to punish such predatory conduct.” Sellinger said. “Craffy was supposed to be an unbiased resource for these Gold Star families. A financial counselor for the Army. Someone who also wore the uniform. Someone these families put their trust in. As alleged in the Indictment, Craffy shattered that trust. He is alleged to have taken advantage of his role, preying upon these families by using lies and deception to steer their investments to make himself money.”