Ex-army financial counselor pleads guilty to life insurance fraud scheme

He targeted families of deceased soliders

Ex-army financial counselor pleads guilty to life insurance fraud scheme

Insurance News

By Jonalyn Cueto

Caz Craffy, a former Army financial counselor, pleaded guilty on Tuesday to defrauding families of deceased soldiers. The plea was entered in a federal court, with Craffy accepting responsibility for orchestrating a scheme that pilfered millions from life insurance payments intended for grieving widows and children.

The Justice Department revealed that Craffy, 41, of Colts Neck, New Jersey, manipulated his position to direct clients to a brokerage firm where he worked part-time. According to the Washington Post, over four years, he managed the accounts of two dozen families, leading to total losses of $3.7 million, from which he earned approximately $1.4 million in commissions. The criminal activities began in 2018, shortly after his appointment as a survivor outreach financial counselor.

Charged with 10 counts, including wire and securities fraud, Craffy now faces a potential prison sentence of eight to 10 years as per his plea agreement. The sentencing, scheduled for August, will also address restitution amounts. Originally, he faced a much longer sentence if the case had gone to trial.

Attorney General Merrick Garland emphasized the government’s stance on such crimes, stating, “Those who target and steal from the families of fallen American servicemembers will be held accountable for their crimes.”

Bereaved families experiencing more losses

The prosecution asserted that Craffy exploited his military-sanctioned role to gain the trust of bereaved families, persuading them to make high-risk investments with devastating outcomes. Families involved reported substantial financial losses, with individual amounts ranging from $6,300 to over $375,000.

This plea resolves part of a broader controversy uncovered by a Washington Post investigation last year, which led to increased legislative scrutiny and subsequent reforms. In response to the exposé, Congress passed legislation mandating stricter vetting of military financial counselors.

Despite the legal closure, some victims remain dissatisfied with the outcome. Sharon Hartz, whose son Sgt. Thomas F. Anastasio died in 2019, met Craffy under the pretense of prudent financial planning. Instead, her family’s investments dwindled by $200,000 under his guidance.

“The way he destroyed so many lives...I don’t think that’s enough for what he did. I don’t think that’s justice,” Hartz said after the hearing.

Evaluation of oversight

The case has prompted a reevaluation of oversight within military financial counseling roles. An Army official, who declined to be named, previously stated that these counselors are meant to provide education and support on benefits and estate planning but should not influence specific investment decisions.

As Craffy awaits sentencing, the US Securities and Exchange Commission continues its civil proceedings against him. The Army Reserve has yet to announce if Craffy will face additional military disciplinary actions. Lt. Col. Addie L. Leonhardt confirmed that the matter is being taken very seriously and will be addressed in accordance with Army regulations and the Uniform Code of Military Justice.

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