The Securities and Exchange Commission (SEC) has charged former U.S. Army financial counselor Caz L. Craffy with defrauding Gold Star family members of benefits, including of life insurance and survivor benefits received after the death of an active duty service member.
“Rather than help Gold Star families best use their survivor benefits, we allege that Mr. Craffy manipulated them to profit from their grief. We owe an incredible debt of gratitude to these families who have sacrificed so much in service to our country," Gurbir S. Grewal, director of the SEC’s Enforcement Division, said in a release. "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.”
The SEC alleges that between May 2018 and November 2022, Craffy manipulated grieving family members, directing them to transfer their benefits into brokerage accounts he managed outside of his official as a financial counselor for the Army, the release stated. He engaged in unauthorized trading and recommended high-risk strategies that did not align with his customers' investment profiles, and leading Craffy's customers to incur more than $1.64 million in commissions and fees, while suffering approximately $1.79 million in realized losses in the span of 54 months,. According to the SEC's complaint, Craffy also misappropriated $50,000 from the IRA account of a minor.
According to Antonia M. Apps, regional director of the SEC's New York Regional Office, Craffy repeatedly defrauded families who had lost loved ones in service to their country. The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains, civil penalties and more, as it pursues legal action against him, the release said.
The SEC emphasized its commitment to holding bad actors accountable, whether in the military or elsewhere, and will use all available tools to do so, according to the release.
The SEC's complaint, filed in the U.S. District Court for the District of New Jersey, charges Craffy with violating federal securities laws and Regulation Best Interest. The agency is working with various authorities, including the U.S. Attorney's Office for the District of New Jersey, to investigate the case, the release reported
The SEC acknowledges the assistance of several organizations, including the Financial Industry Regulatory Authority, Army Criminal Investigation Division, FBI and Homeland Security Investigations. According to the SEC release, its ongoing investigation is being conducted by a team from the New York Regional Office, with support from the Office of Investigative and Market Analytics. The SEC's Office of Investor Education and Advocacy also provides resources to help service members and their families make informed financial decisions and protect themselves from scams.
