Financial adviser admits swindling families of fallen service members

New Jersey financial counselor Caz Craffy pleaded guilty on Tuesday to 10 fraud and financial charges, the Justice Department said. He is also a major in the U.S. Army Reserves. Six of the charges pertain to wire fraud, while the others include securities fraud, lying on a lone application, lying to the government, and acting for personal financial benefit, according to Craffy’s indictment from last year.

What did he do? Gold Star families have lost a loved one who was an active-duty servicemember. When the active duty servicemember dies, his or her beneficiary is entitled to $100,000 and the servicemember’s life insurance, which can be up to $400,000. The military provides financial counselors to the Gold Star beneficiaries and their families.

How did he defraud the families? Craffy managed investment accounts in a private-sector job while also assisting Gold Star families for the U.S. Army Reserves, according to a statement by the Justice Department. The Army had prohibited him from giving his personal opinions on investment. Nonetheless, Craffy encouraged various Gold Star beneficiaries to invest nearly $10 million into accounts he managed in his private employment. He then made trades and investments using those accounts without the families’ permission. He gathered roughly $1.4 million in commissions, while the Gold Star families’ accounts lost $3.7 million.

So what happens to Craffy now? His sentencing hearing is scheduled for Aug. 21. Last year, The Financial Industry Regulatory Authority banned any of its members from associating with Craffy. The U.S. Securities and Exchange Commission still has pending charges against him based on the same actions detailed in the Justice Department’s indictment.

Dig deeper: Read Kim Henderson’s report in WORLD Magazine about the ongoing search for missing U.S. veterans.