SEC Charges Advisor for Defrauding Gold Star Family Members
The Securities and Exchange Commission charged former U.S. Army financial counselor Caz L. Craffy for defrauding Gold Star family members and others.
The SEC says Craffy engaged in unauthorized trading, including life insurance and family survivor benefits they received following the death of an active-duty service member, and for recommending excessive trades and higher risk strategies that did not match customers’ investment profiles.
According to the SEC’s complaint, Craffy, of Colts Neck, New Jersey, was permitted to provide general financial education to service members’ families through his job as a U.S. Army financial counselor. However, as alleged, between May 2018 and November 2022, Craffy used his position and access to manipulate grieving family members by directing them to transfer their benefits into brokerage accounts he managed outside of his official duties with the U.S. Army.
According to the SEC, once the funds were deposited, Craffy engaged in unauthorized trading and trading that did not match his customers’ risk profiles and investment objectives and exposed them to higher risks of loss from excessive trading, concentration and lack of diversification.
The SEC says that in that 54-month span, Craffy’s customers incurred more than $1.64 million in commissions and fees, most of which Craffy pocketed, while the accounts he managed suffered approximately $1.79 million in realized losses and faced additional unrealized losses of approximately $1.8 million. In one case, Craffy misappropriated $50,000 from the IRA account of a minor child whose parent had died on active duty.
The complaint charges Craffy with violating SEC rules.
In connection, the Financial Industry Regulatory Authority announced that it has expelled Monmouth Capital Management for churning and excessively trading customer accounts in which several of the accounts were owned by Gold Star Families.
According to BrokerCheck, Craffy worked with Monmouth for a year after leaving Newbridge Securities Corporation, which he served for three years. Prior to that, he worked for three firms over the span of six years. He was expelled by FINRA in May 2023 after refusing to provide information, documents and an on-the-record testimony. According to FINRA, the request originated from an investigation of Craffy’s potential conversion of customer money, loans or gifts from customers, active trading in customer accounts, and failure to fully disclose certain OBAs.
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