Ex-Army staffer who defrauded Gold Star families sentenced to 12 years
A former Army financial counselor who siphoned millions of dollars from life insurance funds in a fraud scheme targeting Gold Star families was sentenced to more than 12 years in prison, prosecutors said, in a case officials described as a shocking abuse of grieving widows and children.
Caz Craffy, 42, was an Army civilian employee responsible for providing basic financial guidance for Army families facing the loss of loved ones. But for years, he leveraged that position to illegally cultivate families into clients for a brokerage firm where he was moonlighting, urging them to invest their insurance payouts in high-risk trades with exorbitant commissions, The Washington Post found in an exclusive investigation ahead of his arrest last year.
Two dozen families lost $3.7 million cumulatively, prosecutors said, netting Craffy $1.4 million in commissions in activity that the Army failed to detect. In some cases, Craffy was assigned to work with families he then victimized. In others, he scoured military databases to find additional people he could exploit, authorities said.
Following Craffy’s guilty plea for wire and securities fraud, the government asked a federal judge to sentence him 10 years in prison. The judge handed down a sentence of more than 12 years in prison, including the forfeiture of the commission money, prosecutors said in a news release.
“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,” said Philip R. Sellinger, the U.S. attorney for the District of New Jersey. “The lengthy term of imprisonment imposed today is just punishment for this heinous and shameless crime.”
Craffy’s attorney declined to comment.
At the time Craffy was engaged in his criminal enterprise, military life insurance payments were typically $400,000. The sum was raised to $500,000 last year. Families can receive an additional $100,000 to help cover immediate expenses and loss of income.
About 400 counselors across the Defense Department assist in financial counseling for service members and their families. Some, like Craffy, are dispatched to handle the delicate task of aiding families with guidance following a death, when a lump sum of money lands in their bank account.
Craffy was hired by the Army as a survivor outreach financial counselor in 2017. Such personnel “educate and support their clients on their benefits and estate planning needs,” an Army official previously told The Post, emphasizing that their duties “do not include recommending or choosing specific investments and investing money.”
Craffy went far beyond his duties the year after he was hired, prosecutors said. Families said that Craffy gained their trust by leveraging his Army credentials, including meeting them in uniform as an Army Reserve officer.
Some mistakenly believed his investment guidance was authorized by the military. Their accounts were put into speculative assets and volatile stocks, prosecutors said, and Craffy was indifferent to the mounting losses because he was earning commissions either way. The individual losses ranged from $6,300 to more than $375,000, court documents show.
Craffy is still an officer in the Army Reserve, officials said, though it is unclear what additional punishments he might face.
“The U.S. Army Reserve remains committed to holding personnel accountable for conduct that does not align with DoD and Army policies,” said Lt. Col. Addie Leonhardt, an Army Reserve spokesperson. “However, the Army Reserve generally cannot comment on pending military personnel matters.”
Following The Post’s investigation into Craffy, Reps. Mikie Sherrill (D-N.J.) and Don Bacon (R-Neb.) introduced a bill requiring the Defense Department to enhance vetting procedures for military financial counselors. The legislation became law last year.
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