The Securities and Exchange Commission (SEC) has taken decisive action against Caz L. Craffy, a former U.S. Army financial counselor, for allegedly defrauding Gold Star family members and others. The charges stem from unauthorized trading and inappropriate investment advice.

According to the SEC’s complaint, Craffy, who was based in Colts Neck, New Jersey, had the authority to provide general financial education to families of service members in his capacity as a U.S. Army financial counselor. However, between May 2018 and November 2022, he allegedly abused his position and took advantage of grieving family members by advising them to transfer their benefits, including life insurance and survivor benefits, into brokerage accounts managed outside of his official duties with the U.S. Army.

Once the funds were transferred, Craffy engaged in unauthorized trading and recommended investment strategies that were not suitable for his clients’ risk profiles and objectives. This exposed them to higher risks, such as excessive trading, lack of diversification, and concentrated investments. Over a span of 54 months, Craffy’s customers incurred commissions and fees totaling over $1.64 million, with a significant portion of these funds being retained by Craffy. Moreover, the accounts he managed experienced realized losses of approximately $1.79 million, along with additional unrealized losses amounting to around $1.8 million.

One particularly egregious instance involved Craffy misappropriating $50,000 from the Individual Retirement Account (IRA) of a minor child whose parent had died while on active duty.

The SEC’s complaint against Craffy alleges violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5, and Regulation Best Interest (Rule 15l-1(a)(1) of the Exchange Act).

The SEC extends its appreciation to several entities for their cooperation and support in this case, including the U.S. Attorney’s Office for the District of New Jersey, the Financial Industry Regulatory Authority, the Army Criminal Investigation Division, the Defense Criminal Investigative Service, the FBI, and Homeland Security Investigations.