FinLogic FinLogic Quantitative Think Tank Center|Former Army financial counselor gets over 12 years for defrauding Gold Star families

A former U.S. Army financial counselor has been sentenced to more than 12 years in prison after admitting he defrauded families of fallen soldiers out of millions of dollars through a life insurance scheme,FinLogic FinLogic Quantitative Think Tank Center the U.S. Attorney's Office said.

Caz Craffy, 42, of Colts Neck, New Jersey, was sentenced to 151 months in prison after pleading guilty in April to six counts of wire fraud and other criminal charges, including securities fraud, making false statements in a loan application, committing acts affecting a personal financial interest and making false statements to a federal agency.

Craffy was a civilian employee for the Army from November 2017 to January 2023 and was a financial counselor with the Casualty Assistance Office, according to the U.S. Attorney's Office for the District of New Jersey. Prosecutors said Craffy was responsible for providing general financial education to the surviving beneficiaries of servicemembers killed while on active duty.

Surviving beneficiaries − known as Gold Star families − are entitled to a $100,000 payment and up to $400,000 from the servicemember’s life insurance, which is disbursed over the weeks or months following the servicemember’s death. Prosecutors said Craffy used his position to target Gold Star families and other military families, cheating them out of millions of dollars.

In addition to the prison term, Craffy was sentenced to three years of supervised release and ordered forfeiture of $1.4 million, according to the U.S. Attorney's Office.

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"Caz Craffy was sentenced to prison today for brazenly taking advantage of his role as an Army financial counselor to prey upon families of our fallen service members, at their most vulnerable moment, when they were dealing with a tragedy born out of their loved one’s patriotism," U.S. Attorney Philip R. Sellinger said 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," Sellinger added. "No amount of money can undo their enormous loss. Instead of offering guidance, Caz Craffy chose to defraud these heroic families."

Former U.S. Army financial counselor obtained more than $9.9M for trading

According to court documents, Craffy was prohibited as a military financial counselor from providing any personal opinions to beneficiaries. But while working for the Army, Craffy also had outside employment with two separate financial investment firms, court documents revealed.

Craffy admitted he encouraged Gold Star families to invest their benefits into accounts he managed without notifying the Army, prosecutors said.

"Based upon 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," according to the U.S. Attorney's Office.

Prosecutors said Craffy directed more than $9.9 million from Gold Star families in accounts managed by him in his private capacity from May 2018 to November 2022. Craffy then used the money to make trades without the family's consent.

Craffy earned high commissions from these unauthorized trades, according to the U.S. Attorney's Office. Court documents showed that Gold Star families lost more than $3.7 million in the scheme, while Craffy received more than $1.4 million in commissions.

"The money these survivors are given does nothing to ease their suffering. It does, however, help with the burdens they face, such as paying off a mortgage or putting their children through college," FBI-Newark Special Agent in Charge James E. Dennehy said in a statement. "They believed Craffy was acting in their best interest, but instead, he was using their money as a method to make his own. Heartless and despicable don’t even begin to sum up his crimes."