Ex Army Staffer Indicted in Alleged Multimillion Dollar Fraud of Gold Star Families
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2023-10-06
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Ex-Army Staffer Indicted in Alleged Multimillion-Dollar Fraud of Gold Star Families.
A former Army financial counselor was charged Thursday with defrauding grieving military families out of life insurance payments for their dead loved ones, allegedly using investment trades to bleed their accounts and fatten his own.
The U.S. attorneys office in New Jersey charged Caz Craffy on 10 counts, including wire and securities fraud, accusing him of swindling two dozen Army families out of six-figure life insurance payments while moonlighting at brokerage firms. Federal investigators said the families’ accounts shrank by $3.4 million due to market losses and $1.4 million in commissions paid to Craffy.
The charges follow a Washington Post report from February detailing the allegations of four military families who said Craffy strip-mined their accounts through trades that earned him thousands of dollars in commissions, often executed, the families alleged, without their consent or consultation.
In addition to the criminal charges, the Securities and Exchange Commission filed a civil complaint against Craffy and the firm where he worked, “seeking permanent injunctions, disgorgement of allegedly ill-gotten gains, plus interest, and civil penalties.”
The SEC’s complaint charges Craffy with violating the antifraud provisions of the federal securities laws and the “best interest” standard for broker-dealers. The SEC also noted “one particularly egregious offense,” in which Craffy is alleged to have “misappropriated $50,000 from the IRA account of a minor child whose parent had died on active duty.”
The Financial Industry Regulatory Authority, Finra, a nongovernmental body that oversees broker-dealers, also took action against the firm where Craffy worked, a move that will likely shutter the business.
“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 written statement.
New Jersey U.S. Attorney Philip Sellinger said 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.”
After The Post’s story, more families came forward to make similar allegations against Craffy, said Natalie Khawam, an attorney representing nine families who suffered financial losses from investments with Craffy and are pursuing options for recouping their funds.
“The fraud that was committed on these susceptible Gold Star families was despicable,” she said, referring to the designation given to immediate relatives that have lost a service member. The term is often associated with troops killed in
A former Army financial counselor was charged Thursday with defrauding grieving military families out of life insurance payments for their dead loved ones, allegedly using investment trades to bleed their accounts and fatten his own.
The U.S. attorneys office in New Jersey charged Caz Craffy on 10 counts, including wire and securities fraud, accusing him of swindling two dozen Army families out of six-figure life insurance payments while moonlighting at brokerage firms. Federal investigators said the families’ accounts shrank by $3.4 million due to market losses and $1.4 million in commissions paid to Craffy.
The charges follow a Washington Post report from February detailing the allegations of four military families who said Craffy strip-mined their accounts through trades that earned him thousands of dollars in commissions, often executed, the families alleged, without their consent or consultation.
In addition to the criminal charges, the Securities and Exchange Commission filed a civil complaint against Craffy and the firm where he worked, “seeking permanent injunctions, disgorgement of allegedly ill-gotten gains, plus interest, and civil penalties.”
The SEC’s complaint charges Craffy with violating the antifraud provisions of the federal securities laws and the “best interest” standard for broker-dealers. The SEC also noted “one particularly egregious offense,” in which Craffy is alleged to have “misappropriated $50,000 from the IRA account of a minor child whose parent had died on active duty.”
The Financial Industry Regulatory Authority, Finra, a nongovernmental body that oversees broker-dealers, also took action against the firm where Craffy worked, a move that will likely shutter the business.
“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 written statement.
New Jersey U.S. Attorney Philip Sellinger said 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.”
After The Post’s story, more families came forward to make similar allegations against Craffy, said Natalie Khawam, an attorney representing nine families who suffered financial losses from investments with Craffy and are pursuing options for recouping their funds.
“The fraud that was committed on these susceptible Gold Star families was despicable,” she said, referring to the designation given to immediate relatives that have lost a service member. The term is often associated with troops killed in
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