A financial counselor for the Army's Casualty Assistance Center in New Jersey pleaded guilty Monday to wire and securities fraud in a scheme that bilked Gold Star families out of the money awarded them after the death of their service member.
Caz Craffy, who also went by Carz Craffey, was responsible for educating surviving family members on the financial benefits they receive: a $100,000 death gratuity and life insurance of up to $400,000.
Instead of simply advising the families, Craffy, who also was employed with two different financial investment firms, used his position to identify families and encouraged them to invest in accounts with the firms. He misled them into thinking that the money management was part of the Army's benefits and was service-approved, according to the Justice Department.
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From May 2018 to November 2022, Craffy invested more than $9.9 million of the families' money in accounts he managed, executing trades -- sometimes without the families' permission -- and earning high commissions.
During that time, the Gold Star families' accounts lost more than $3.7 million while Craffy, 41, earned $1.4 million in commissions from them.
As an employment requirement, Craffy was prohibited from offering personal opinions on beneficiaries' benefits decisions, and he was not allowed to participate in government matters in which he had outside financial interests.
Justice Department officials said the Colts Neck, New Jersey, resident preyed on families when they were at their most vulnerable.
"Nothing can undo the enormous loss that Gold Star families have suffered, but the Justice Department is committed to doing everything in our power to protect them from further harm," Attorney General Merrick Garland said Tuesday in a statement.
"These Gold Star families have laid the dearest sacrifice on the altar of freedom. And they deserve our utmost respect and compassion, as well as some small measure of financial security from a grateful nation," said U.S. Attorney Philip Sellinger. "Caz Craffy now faces the prospect of years in prison for ripping off these families to line his own pocket."
In the wake of the case, Congress passed a bipartisan law in December that required the Defense Department to verify financial disclosure statements that Casualty Assistance Center counselors are required to file each year and ensure that they have no conflicts of interest.
In a press conference Tuesday in Washington, D.C., sponsors of a law that passed last December to protect Gold Star families from predatory financial counselors said such employees hold a position of trust, and military families must have confidence in them.
"[Craffy] prioritized his own financial situation instead of the finances of those he was entrusted to help," said Rep. Mikie Sherrill, D-N.J., sponsor of the Protecting Our Service Members and Their Families from Predatory Financial Practices Act, passed as part of the national defense policy act.
"Military families should never have to doubt whether or not they can trust the counselor assigned to them," said Sherrill, a former Navy helicopter pilot.
"The legal system works. Doesn't always work as fast as we would like, but it works," said co-sponsor Rep. Don Bacon, R-Neb. "We have an obligation to help these families. We will never forget their sons and daughters who lost the battle."
Bacon is a retired Air Force brigadier general.
Craffy faces up to 20 years in prison for each count of wire fraud and securities fraud and additional prison time for submitting false statements on loan applications and to federal agents. He also faces steep fines, up to $5 million for securities fraud or twice the gain or loss, whichever is greater.
The Justice Department did not say whether the families would be compensated.
Craffy also is the subject of a civil complaint by the Securities and Exchange Commission and has been banned from any business associated with the Financial Industry Regulatory Authority.
Craffy's sentencing hearing is scheduled for Aug. 21.
