A former U.S. Army financial counselor made use of his situation to bilk two dozen useless company members’ family members out of lifetime insurance policies and other gains by steering them to investments on which he was secretly reaping hefty commissions, federal prosecutors said on Friday.
The former counselor, Caz Craffy, was billed with wire and securities fraud and other crimes for what prosecutors said was a plan that price tag the Gold Star family members — immediate kinfolk of provider customers who died though serving — $3.4 million in investment losses and $1.4 million in commissions gathered by Mr. Craffy.
“Stealing from Gold Star households whose beloved ones manufactured the greatest sacrifice in assistance to our nation is a shameful crime,” Lawyer Standard Merrick B. Garland explained in a statement.
In addition to the prison costs, Mr. Craffy faces a civil criticism filed by the Securities and Exchange Commission.
A attorney for Mr. Craffy, Mark Berman, declined to remark.
The announcement of the rates towards Mr. Craffy, a civilian Army staff from 2017 until this earlier January and a longtime member of the Army Reserve, arrived after a February article in The Washington Write-up detailed many families’ complaints about him.
Immediately after The Submit printed its short article, federal lawmakers released laws that would enhance the screening of economical counselors used by the Protection Division to guard against conflicts of desire.
Lt. Col. Terence M. Kelley, an Military spokesman, reported on Friday that “any impropriety from company customers and their families” was “a significant subject.” He said the Army was examining its policies and processes to make sure that any individual doing work as a financial counselor was adhering to “all moral criteria expected by regulation, policy and their respective money certification.”
The families’ descriptions to The Submit of how Mr. Craffy, 41, of Colts Neck, N.J., depleted alternatively than preserved their lifetime insurance coverage and other payouts intently aligned with the scheme laid out by prosecutors in an indictment.
Mr. Craffy’s work as economic counselor was to provide basic economic education to veterans’ beneficiaries as a assistance the Army gives to enable grieving family members, the indictment says.
But in violation of Military rules, Mr. Craffy also worked for two personal money investment corporations, one based mostly in Boca Raton, Fla., and the other in Issue Nice Seaside, N.J., prosecutors mentioned. Neither the Military nor the families he suggested understood of his moonlighting, prosecutors said.
“He was prohibited from supplying any personalized viewpoints concerning the surviving beneficiary’s positive aspects selections,” the indictment states, introducing that Mr. Craffy “was not permitted to participate individually in any federal government make any difference in which he had an outside the house monetary interest.”
But prosecutors explained Mr. Craffy did each, focusing on Gold Star people, who are entitled to a $100,000 dying gratuity and lifestyle insurance plan of up to $400,000. He utilised his accessibility to military databases to detect and directly contact the households, even all those he did not get the job done with.
That was 1 element of the plan, prosecutors mentioned. In another, Mr. Craffy convinced people to make investments in accounts he managed in his personal get the job done, prosecutors mentioned. As soon as he had regulate of a family’s cash, he “repeatedly executed trades, typically with out the family’s authorization,” amassing large commissions in the approach.
When people questioned Mr. Craffy about the investments, he “told them not to check out their account statements,” Philip R. Sellinger, the U.S. legal professional for New Jersey, stated at a information convention on Friday. “Or he provided excuses for why their holdings weren’t carrying out effectively.”
Mr. Craffy’s intention was not to assist the households but to enrich himself, the indictment states, noting that he produced money irrespective of how the investments fared.
“He received no subject how the trades arrived out, heads or tails,” Mr. Sellinger explained, “because he got paid out possibly way.”