Former US Army staffer pleads guilty to defrauding Gold Star families

By Jonathan Stempel

(Reuters) - A former U.S. Army financial counselor pleaded guilty on Tuesday to defrauding grieving military families out of life insurance payments, in a scheme whose alleged victims included widows and a 13-year-old girl whose father had died.

Caz Craffy, 41, of Colts Neck, New Jersey, could face about eight to 10 years in prison after pleading guilty to all 10 charges he faced, including wire fraud, securities fraud and making false statements.

"Those who target and steal from the families of fallen American servicemembers will be held accountable for their crimes," Attorney General Merrick Garland said in a statement.

Prosecutors said Craffy, also known as Carz Craffey, from May 2018 to November 2022 manipulated members of at least two dozen Gold Star families into transferring $9.9 million of survivor benefits into private brokerage accounts he controlled.

Craffy then allegedly made more than 1,000 unauthorized trades, generating over $3.4 million of losses and more than $1.4 million of commissions for himself.

The defendant was a civilian employee of the Army, but victims believed the Army authorized his conduct.

He has also been a major in the U.S. Army Reserve, and enlisted since 2003.

Gold Star families include people whose immediate family members die in active duty.

Survivors can receive a $100,000 death benefit and the fallen soldier's life insurance up to $400,000.

According to court papers, Craffy lost 60% of a widow's $400,000 investment meant to fund her children's college expenses and care for her mother, and looted $50,000 from the 13-year-old girl's retirement account.

Mark Berman, a lawyer for Craffy, was not immediately available for comment.

Craffy entered his plea before U.S. District Judge Georgette Castner in Trenton, New Jersey. He is scheduled to be sentenced on Aug. 21.

He could spend 97 months to 121 months in prison under recommended federal guidelines, and agreed not to appeal a sentence up to that range. Craffy also agreed to make full restitution, including proceeds from selling his home.

A spokeswoman for the Army Reserve declined specific comment on Craffy's case, citing privacy laws, but said it "remains committed to holding personnel accountable for conduct that does not align with Department of Defense and Army policies."

(Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)