A U.S. Army financial counselor and Army Reserves major has pleaded guilty to defrauding upward of 20 Gold Star families and committing related financial crimes, in a New Jersey district court.
Gold Star families are families that have lost an immediate family member as a result of active military service in a conflict zone. More than 1.7 million people in the United States are members of Gold Star families.
Mr. Craffy also pleaded guilty to securities fraud, making false statements in a loan application, committing acts affecting a personal financial interest, and making false statements to a federal agency.
Attorney General Merrick Garland said those who target families of fallen service members will face the full force of the law.
“Those who target and steal from the families of fallen American servicemembers will be held accountable for their crimes,” he said in a statement on April 16.
“Nothing can undo the enormous loss that Gold Star families have suffered, but the Justice Department is committed to doing everything in our power to protect them from further harm.”
Gold Star Families Targeted: DOJ
Authorities alleged that Mr. Craffy used his position as an Army financial counselor to identify and target Gold Star families, encouraging them to invest these payouts into accounts that he managed in his outside private employment.“Based upon Craffy’s false representations and omissions, the vast majority of the Gold Star families mistakenly believed that Craffy’s management of their money was done on behalf of and with the Army’s authorization,” the department said in a statement.
“From May 2018 to November 2022, Craffy obtained more than $9.9 million from Gold Star families to invest in accounts managed by Craffy in his private capacity.”
The federal agency says that Mr. Craffy repeatedly executed trades, often without families’ authorization, that earned him $1.4 million in commissions drawn from the family accounts. The Gold Star family accounts lost more than $3.7 million during the scheme’s timeframe.
For his crimes, which he has now admitted, Mr. Craffy faces a maximum penalty of 20 years in prison for each count of wire fraud and securities fraud and a maximum penalty of two years in prison for submitting a false statement on a loan application.
He also faces a maximum penalty of five years in prison for acts affecting a personal interest and false statements to a federal agent. Other penalties could include a maximum fine of either $250,000 or twice the gain or loss from the offense, whichever is greater. A sentencing hearing is scheduled for Aug. 21.
A separate U.S. Securities and Exchange Commission civil complaint against Mr. Craffy is still pending.
