During a July 7 press conference in Newark, U.S. Attorney for New Jersey Philip Sellinger announced a scathing 10-count indictment against Caz Craffy, 41, of Colts Neck, who is charged with allegedly defrauding two dozen Gold Star families.

Craffy (aka Carz Craffey) served as a financial counselor for the U.S. Army from November 2017 until this past January. In that role, he was responsible for providing general financial education to the surviving beneficiaries of Gold Star families, who are entitled to a $100,000 death gratuity and the soldier’s life insurance of up to $400,000. Prosecutors allege that despite not being permitted to participate personally in any government matter in which he had an outside financial interest, Craffy – without telling the Army – simultaneously maintained outside employment with two separate financial investment firms.

“Craffy used his position as an Army financial counselor to identify and target Gold Star families and other military families,” prosecutors allege, according to case documents and court statements. “He encouraged the Gold Star families to invest their survivor benefits in investment accounts that he managed in his outside, private employment. 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.”

Prosecutors allege that between May 2018 and November 2022, Craffy obtained more than $9.9 million from Gold Star families to invest in accounts managed by him in his private capacity.

“Once in control of this money, Craffy repeatedly executed trades, often without the family’s authorization,” prosecutors allege. “These unauthorized trades earned Craffy high commissions. During the timeframe of the alleged scheme, the Gold Star family accounts had lost more than $3.4 million, while Craffy personally earned more than $1.4 million in commissions, drawn from the family accounts.”

Craffy is charged 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.

“The families of our fallen service members have laid the dearest sacrifice on the altar of freedom,” said Sellinger. “These Gold Star families deserve our utmost respect and compassion, as well as some small measure of financial security from a grateful nation. They must be off-limits for fraudsters. But, as the indictment alleges, this defendant took advantage of his role as an Army financial counselor to prey upon these families, using lies and deception to steer their investments in a way that would make him money. There is no room for those who seek to rip off families of fallen service members to make a buck. We will use every means at our disposal to ensure that those who defraud military families are held accountable.”

In a statement, Attorney General Merrick Garland said that stealing from Gold Star families, whose families made the ultimate sacrifice in service to our nation, is a shameful crime.

“Predatory conduct that targets the families of fallen American service members will be met with the full force of the Justice Department,” said Garland.

“They [Gold Star families] are given money and assistance to help ease the burden that comes with losing their loved one, however no amount of money can replace what they’ve lost,” said Special Agent in Charge James Dennehy of the Newark FBI. “We allege Craffy took advantage of this position and defrauded families already going through a tremendous amount of suffering.”

The wire fraud and securities fraud charges each carry a maximum penalty of 20 years in prison. The charge of submitting a false statement on a loan application is punishable by a maximum of two years in prison, while the charges of acts affecting a personal interest and false statements to a federal agent are each punishable by five years in prison.

All counts but the securities fraud count are also punishable by a maximum fine of either $250,000 or twice the gain or loss from the offense, whichever is greatest. The securities fraud count is punishable by a maximum fine of either $5 million or twice the gain or loss from the offense, whichever is greatest.

Craffy was expected to make his initial appearance Friday at the Trenton Federal Courthouse.

He also faces a civil complaint filed that same day by the U.S. Securities and Exchange Commission (SEC) citing many of the same allegations from the criminal indictment. The SEC’s complaint charges Craffy with violating the antifraud provisions of the federal securities laws and Regulation Best Interest.

The SEC says it is seeking permanent injunctions, disgorgement of allegedly ill-gotten gains, plus interest, and civil penalties.

“Rather than help Gold Star families best use their survivor benefits, we allege that Mr. Craffy manipulated them to profit from their grief,” said Gurbir Grewal, director of the SEC’s Enforcement Division and a former New Jersey attorney general. “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.”

An attorney representing Craffy told NJBIZ he had no comment in response to the allegations.