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July 07, 2023 at 03:19 PM
A former broker who served as a financial counselor with the U.S. Army and was a major in the U.S. Army Reserve, has been indicted by the Justice Department for allegedly defrauding two dozen Gold Star families, according to Philip R. Sellinger, U.S. attorney for the District of New Jersey, and court documents.
In addition, the firm he most recently worked with has been expelled by the Financial Industry Regulatory authority for violations of Regulation Best Interest.
Caz Craffy (aka “Carz Craffey”) of Colts Neck, New Jersey, was charged 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.
According to documents filed in the case and statements made in court, from May 2018 to November 2022, Craffy obtained nearly $10 million from Gold Star families to invest in accounts he managed in his private capacity. Once in control of their money, Craffy repeatedly executed trades, often without the family’s authorization.
For Craffy, 41, the unauthorized trades resulted in high commissions. During the timeframe of the alleged scheme, the accounts of the Gold Star families lost roughly $3.6 million, while Craffy personally earned more than $1.4 million in commissions, drawn from the family accounts.
“Stealing from Gold Star families whose loved ones made the ultimate sacrifice in service to our nation is a shameful crime,” Attorney General Merrick B. Garland said in a statement.
Craffy — permanently prohibited from association with any member of FINRA in December — was scheduled to make his initial appearance on Friday before Tonianne J. Bongiovanni, U.S. Magistrate Judge, at the Trenton Federal Courthouse.
Gold Star Families
When a member of the U.S. Armed Services dies during active duty, their 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 typically disbursed in a few weeks or months following the servicemember’s death. To assist the beneficiaries in this time of need, the military provides several 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 Army, working as a financial counselor with the Casualty Assistance Office. He was also a major in the Army Reserve, where he has been enlisted since 2003.
Craffy was responsible for providing general financial education to surviving beneficiaries and was prohibited from offering any personal opinions regarding benefits decisions, according to Sellinger.
He was not permitted to participate personally in any government matter in which he had an outside financial interest, Sellinger noted.
But, without informing the Army, Craffy simultaneously maintained outside employment with two separate financial investment firms: Newbridge Securities and then Monmouth Capital Management, according to his report on FINRA’s BrokerCheck website.
Craffy used his position as an Army financial counselor to identify and target Gold Star families and other military families, Sellinger said. He encouraged the families to invest their survivor benefits in investment accounts he managed in his outside, private employment.
Based on 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.
