Former Counselor Defrauds Gold Star Families

Offering frauds are frequently one of the largest categories of actions filed by the Commission’s enforcement divisions as readers of material in this space have frequently heard. Often those targeted by the bogus offerings are supposed friends and at times even relatives of those who created and implemented the fraudulent activity.  The activity at the center of one of the  Commission’s most recent offering fraud, while typical of these cases, is heart-breaking. SEC v. Craffy, Civil Action No. 3:23-cv-03639 (D.N.J.).

This action centers on an offering fraud scam and the misuse of account assets of military Gold Star families. On September 4, 2024, the Commission obtained a final judgment against Caz L. Craffy, an individual who was charged with defrauding Gold Star families – those that suffered the loss of a family member who was in the military.

Defendant in this action was permitted to provide general financial and education work to service members’ gold star families through his job as a U.S. Army financial counselor. Between 2018 and 2022 Defendant Craffy, working as a U.S. Army financial counselor, directed grieving family members to transfer their benefits to him. At the time Mr. Craffy was working full time for private brokerage firms. Once the assets were transferred Defendant Craffy used the assets to engage in unauthorized and excessive trading.

Through improper and often excess trading the accounts directed by Mr. Craffy ran up losses of about $1.79 million.  The improper trading also resulted in fees totaling about $1.64 million in fees, most of which were paid to Defendant Craffy. The Commission’s complaint alleged violations of Securities Act Section 17(a) and Exchange Act Sections 10(b) and Rules 10b-5 and 151-1(a)(1).

In the parallel criminal case, Mr. Craffy was sentenced to serve 151 months in prison followed by 3 years of supervised release.  He was also ordered to pay  about $1,482,741 and pay $4,085,988 in forfeiture and restitution. U.S. v. Craffy,  No. 23-541 (D.N.J.).  In view of the amounts ordered in the criminal case, the Commission advised the court it did not intend to seek further financial penalties.  See  Lit. Rel. No. 26363 (July 29, 2025).