An Army Reserve officer was charged Thursday, facing allegations he defrauded Gold Star families by losing $3.4 million while making $1.4 million in commissions.
Federal authorities on Friday said that Caz Craffy, who they described as currently a major in the Army Reserve, misappropriated money between 2018 and 2022 that he was supposed to be investing for families of dead soldiers. Instead of assisting them, he allegedly made them put their money into investment accounts he privately managed outside official duties for the Army. In one case, he allegedly misappropriated $50,000 from a minor whose parent died on active duty.
On top of using investment portfolios he controlled himself, authorities say Craffy made high-risk investments far beyond what was agreed upon with the families, and did not properly diversify those huge investments, opening up those families to enormous losses.
"Stealing from Gold Star families whose loved ones made the ultimate sacrifice in service to our nation is a shameful crime," U.S. Attorney General Merrick B. Garland said in a statement. "As alleged in the indictment, the defendant in this case used his position as an Army financial counselor to defraud Gold Star families, steal their money, and enrich himself. Predatory conduct that targets the families of fallen American service members will be met with the full force of the Justice Department."
Soldiers are often signed up for Servicemembers' Group Life Insurance, or SGLI. That program, through the Department of Veterans Affairs, pays out $500,000 to families of service members who die on or off duty. The military services often provide families with financial counselors to help them manage the money.
The Washington Post was first to detail the scheme in February. Craffy did not immediately respond to Military.com's request for comment.
Craffy had been in the Army Reserve since at least 2003, according to the charges. A LinkedIn profile using his name outlines an extensive background in finance, including a bachelor's degree in finance from St. John's University, and a master's in finance from Rutgers Business School. The charges say that Craffy has worked with at least five wealth management companies.
The Securities and Exchange Commission charged Craffy 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. He faces up to 20 years in prison.
"Rather than help Gold Star families best use their survivor benefits, we allege that Mr. Craffy manipulated them to profit from their grief," Gurbir Grewal, director of the SEC's Enforcement Division, said in a statement. "We owe an incredible debt of gratitude to these families who have sacrificed so much in service to our country. I am grateful to the SEC staff for holding Mr. Craffy accountable for his shameless conduct and delivering some measure of justice to these incredible families."
-- Steve Beynon can be reached at Steve.Beynon@military.com. Follow him on Twitter @StevenBeynon
Related: Opt Out or Pay: All Troops to Automatically Get Life Insurance March 1
