Wire Fraud Case | How Caz Craffy Defrauded Military Families

• July 27, 2024
• Wire Fraud

Wire fraud can be devastating for anyone, but some criminals specialize in exploiting the most vulnerable. A recent case involving financial advisor Caz Craffy exposed such chilling tactic: Craffy apparently took advantage of military families who had lost members of their family to active duty service. The details are shocking, but Wolper Law Firm knows that crimes like this happen almost every day. A financial fraud attorney can stand strong alongside those who have been victimized by scam artists and help you recover lost or stolen funds. Just as importantly, we can help hold these bad actors accountable and try to ensure that they are duly penalized.

Who is Caz Craffy?

Caz Craffey, or Caz Craffey, as he is also known, is an-ex US Army financial advisor. He was registered to provide financial counseling services in New York and New Jersey before being barred by FINRA (Financial Industry Regulatory Authority) in 2023. The 41-year-old from Colts Neck, New Jersey, was employed with the Army as a financial advisorand a major in the US Army Reserves.

With his work with the Casualty Assistance Office, Craffy was tasked with educating families of martyred soldiers about their financial options. These Gold Star families are eligible to receive up to $500,000 in benefits from the US military, from life insurance as well as a one-time $100,000 death gratuity. However, Craffy used these benefits to enrich himself at the expense of grieving families.

How Did Craffy Defraud Military Families?

Unbeknownst to the US military as well as the families with whom he consulted, Craffy worked at two private brokerage firms during his time as a military financial advisor. The first of these firms, Monmouth Capital Management, was expelled by FINRA due to Craffy’s actions. The other, Newbridge Securities, is not implicated in the scam, but remains under investigation.

While working part time at Monmouth Capital and as a military financial advisor, Craffy exploited his dual role and advised Gold Star families to invest their survivor benefits into accounts that he privately managed. These benefits were payments meant to support widowed spouses and children after the loss of a US service member. The families were under the impression that his advice was part of official US military guidance. In reality, military financial advisors are prohibited from offering personal advice to beneficiaries to prevent exactly this kind of conflict of interest.

During his time as a survivor outreach financial counselor, Craffy defrauded 20 Gold Star families out of their benefits. From May 2018 to November 2022, Craffy funneled over $9.9 million in benefits into private brokerage accounts that he managed. He executed trades often, at times without the families’ knowledge or permission. Gold Star families suffered losses exceeding $3.7 million. Meanwhile, Craffy collected over $1.4 million in commissions.

Military financial advisors are a position of trust. They are meant to provide financial counseling and support to grieving families and help set them up for stability moving forward. Unfortunately, Craffy was well-poised to execute his affinity scheme to abuse his position to enrich himself. He was less likely to be questioned by his victims not only because he connected with them during a time of loss, but also because he was a representative of the US Army.

How Did the Securities & Exchange Commission (“SEC”) Investigate Craffy?

The SEC uncovers and prosecutes financial fraud. Craffy was charged with 10 counts of fraud, including wire fraud and securities fraud. He potentially faces eight to ten years in prison from the results of his plea agreement. An upcoming trial will set restitution amounts that he may be ordered to repay to Gold Star families. It is likely Craffy may be ordered to pay up to $7 million in fines through the SEC action.

Has Caz Craffy Pleaded Guilty to Financial Fraud?

Caz Craffy has pled guilty to financial fraud, including the following securities and wire fraud charges:

• Wire fraud: The maximum penalties for each count of wire fraud include 20 years in prison (along with fines). Craffy faces six counts of wire fraud. His plea deal, however, has lessened the total amount of time that he may spend imprisoned.
• Securities fraud: Securities fraud is punishable with a fine of up to $5 million as well as 20 years imprisonment. Securities fraud includes making inappropriate investments on clients’ behalf, as well as other offenses such as churning trades for commissions.
• Making false statements in a loan application: Making such statements is punishable with up to two years imprisonment.
• Committing acts affecting a personal financial interest: Military financial advisors are barred from offering personal financial advice to their clients. This charge comes with a possible five year sentence.
• Making false statements to a federal agency: This charge carries a potential five year sentence.

His sentencing is on August 21, 2024.

Impact of the Caz Craffy Fraud Case

US Attorney General Merrick Garland said about the case:

“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.”

To that end, Congress has also passed a bipartisan law to protect military families. In July, the House green-lit a bill that requires additional oversight from the Department of Defense for military financial advisors. Accordingly, Casualty Assistance Center counselors must file disclosure statements each year that certify they do not have conflicts of interest. This law aims to facilitate a stringent vetting of civilian hires and swifter penalties for those who seek to take advantage of the financial counseling system.

What is Wire Fraud?

Wire fraud refers to using electronic communications for criminal ends and is often used to prosecute financial scams like phishing email schemes and money laundering. It may involve fraudulent text messaging, email messaging, or the use of telephone or fax lines to perpetrate financial crimes. Today, many wire fraud cases also involve a social media component. Such cases are often connected to banking fraud schemes or additional securities fraud prosecution.

Types of Wire Fraud

Wire fraud elements include, but are not limited to:

• Advance-fee scams: Also called “Nigerian prince scams“, or “long lost uncle scams”, advance fee fraud involves someone requesting an upfront payment so that they can send more money in the future.
• Hiring scams: Job seekers are especially vulnerable to wire scams involving fake job offers. Phony recruiters reach out through social media like LinkedIn and offer access to high paying roles or complex screening processes. After reeling in potential victims, scam artists request payment in exchange, or sometimes attempt to get details like social security numbers, birthdays, or addresses to sell that information or use it for additional schemes.
• Phishing: Phishing involves sending fake emails or texts, often from accounts that impersonate real companies, clients, friends, or family. Simply clicking on these links can expose your phone or technology to viruses and malware.
• Telemarketing: Telemarketing scams can come from random salespeople or from financial advisors who offer to enroll you into certain services for your benefit.
• Ransomware: Ransomware is a cyber-extortion scam that threatens to hold files or funds encrypted until an amount has been paid to the bad actors.
• Identity theft: Identity theft can happen to anyone, but it is especially common when coupled with a phishing scheme or affinity fraud. Sometimes, identity theft occurs when a broker or financial agent impersonates their client in order to authorize trades without their consent.

Wire Fraud vs. Mail Fraud

Wire fraud and mail fraud often involve similar motives, but the execution is different. Mail fraud transmits information through the mail or US Postal service, whereas wire fraud occurs on the phone or online.

How Does Wire Fraud Work?

If you ever receive an email from an unknown name claiming a long lost uncle wants to leave you millions, be on your guard. Once victims send over money, the instigator either disappears or claims to have run into additional hurdles that require further payments. If payments are not collected online or through the phone, then scam artists may seek personal details to commit future identity fraud or may cunningly request cyber access to install malware or ransomware in your device.

Is Wire Fraud a Felony?

Felonies are serious offenses that carry the risk of jail time in addition to civil fines. Wire fraud is a federal felony that carries the risk of imprisonment for 20 to 30 years and fines ranging from $25,000 to $1 million.

How Can I Recover Money After a Wire Fraud Scam?

Falling victim to financial crime can happen to anyone. At Wolper Law Firm, we are dedicated to helping victims recover their losses. Our experts will parse through your case with our signature attention to detail, in-depth legal knowledge, and financial savvy. We will then advise you about which avenues carry the greatest chances of recovery, from FINRA arbitration to filing a lawsuit. We can represent your interests in any of these claims so you may seek a satisfactory resolution.

When Should I Contact a Wire Fraud Attorney?

As soon as you suspect something is not right with your finances, contact a wire fraud attorney. The best chance of recovery happens the sooner you speak up. Document as many of your communications with your financial advisor as you can, whether they take place over email, text message, phone call, or bank statement/online portal. Bring all these information and other related evidence to your consultation with our office.

Wire Fraud Statute of Limitations

The statute of limitations for wire fraud is five years. However, in certain cases involving financial institutions, you may be able to make your claim within ten years. When in doubt, consult with a wire fraud attorney.

Have More Questions About Wire Fraud? Contact Wolper Law Firm to Learn More About How We Can Help

Caz Craffy may be arrested, but there are many more out there who seek to exploit people looking for financial advice. The attorneys at Wolper Law Firm defend investors who have lost money through excess trading, identity theft, unauthorized activity, and irresponsible account management. We may be able to recover stolen or mismanaged funds and restore your financial peace after a case of wire fraud. Contact us for a consultation about your case today.