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Caz Craffy, 41, of Colts Neck, used his role as a counselor with the United States Army to pocket $1.4 million by exploiting the grief of Gold Star families, U.S. Attorney for New Jersey Philip R. Sellinger said.
Craffy – who’s also known as “Carz Craffey” – “used lies and deception” to defraud two dozen families of what he told them were investments, the U.S. attorney said.
For many, it was the only money they had.
Whenever a member of the armed services dies during active duty, his or her surviving beneficiary becomes a Gold Star family member. This entitles them to a $100,000 death gratuity and the soldier’s life insurance up to $400,000.
The payments go out within months, and sometimes weeks, of a service member’s death.
The military provides various forms of assistance, including the appointment of financial counselors such as Craffy.
In his role, Craffy was prohibited from offering any personal opinions on what the families should do with the money, Sellinger said. Nor, of course, could he benefit personally.
Without telling the Army, however, Craffy moonlighted with not one but two financial investment firms, the U.S. attorney said.
Craffy – who was a Reserves major at the time -- specifically identified and targeted vulnerable Gold Star families and other military civilians, according to an indictment returned by a federal grand jury in Trenton.
“False representations and omissions” convinced the vast majority of them that Craffy was managing their money on behalf of the Army, the indictment says.
Instead, he steered it to private and often risky investment accounts that he managed on the side, it says.
From May 2018 to November 2022, Craffy collected more than $9.9 million from Gold Star families to invest in accounts that they thought were controlled by the Army, Sellinger said.
Meanwhile, Craffy “repeatedly executed trades, often without the family’s authorization,” the U.S. attorney said.
The unauthorized trades earned Craffy $1.4 million in commissions, Sellinger said. The families, meanwhile, lost more than $3.4 million, he said.
Craffy allegedly told those who questioned him or balked to be patient and to not look at their statements. He also blamed the COVID pandemic for declining returns, even though the market had grown in three straight years, investigators said.
Craffy got his bachelor of science degree in finance from St. John’s University and master of business administration from Rutgers Business School, according to his LinkedIn profile.
He'd been a major in the U.S. Army Reserves since 2002, but his Army affiliation was terminated in January, 2023, records show.
Craffy was reportedly fired from Monmouth Capital Management of Point Pleasant in 2022 amid an investigation by the Financial Industry Regulatory Authority (FINRA), with whom he allegedly refused to cooperate.
Craffy also previously worked for Newbridge Securities Corporation and National Securities Corporation of Morristown and Joseph Gunnar & Co. of Staten Island, records show.
The SEC and the Army’s Criminal Investigation Division zeroed in on Craffy after a Gold Star family member complained, authorities said.
Craffy took a deal from the government rather than face the outcome of a trial.
He pleaded guilty in U.S. District Court in Trenton on Tuesday, April 16, to multiple counts of wire and securities fraud.
In exchange, he hopes to receive leniency at his sentencing, which U.S. District Judge Georgette Castner scheduled for Aug. 21.
The U.S. Securities and Exchange Commission (SEC) also has a pending civil complaint against Craffy, who’s also permanently prohibited from associating with any member of the FINRA.
“Nothing can undo the enormous loss that Gold Star families have suffered,” said U.S. Attorney General Merrick B. Garland, “but the Justice Department is committed to doing everything in our power to protect them from further harm.”
“These Gold Star families have laid the dearest sacrifice on the altar of freedom,” Sellinger added. “They deserve our utmost respect and compassion, as well as some small measure of financial security from a grateful nation.”
Assistant U.S. Attorneys Martha K. Nye of Sellinger’s Criminal Division in Trenton, and Carolyn Silane of his Economic Crimes Unit in Newark secured the plea.
They assembled the case with the help of the U.S. Army Criminal Investigation Division, the federal Defense Criminal Investigative Service (which is the law enforcement arm of the U.S. Defense Department’s Office of Inspector General), the FBI, Homeland Security Investigations and colleagues in Sellinger’s office.
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