In this screenshot from a Defense Department video, then-1st Lt. Carz Craffey sends Thanksgiving greetings from Baghdad in 2009. Also known as Caz Craffy, the Army Reserve major and financial counselor has been indicted on charges stemming from a scheme that defrauded grieving military families out of $3 million in survivor benefits, according to the Justice Department. (Defense Department)

An Army Reserve major and financial counselor has been indicted on charges stemming from a scheme that defrauded grieving military families out of $3 million in survivor benefits, according to the Justice Department.

Caz Craffy, also known as Carz Craffey, 41, of Colts Neck, N.J., was charged last week with wire fraud, making false statements in a loan application and securities fraud, among others.

The case has prompted congressional legislation intended to prevent families of fallen service members from being taken advantage of in the future, The Washington Post reported in late June.

The amendment to next year’s defense policy bill would require stricter vetting of financial counselors employed by the Defense Department, the paper reported.

Craffy targeted at least two dozen Gold Star families, tricking them into investing in private brokerage accounts that he managed for his own financial gain, the Justice Department said in a statement Friday.

Gold Star families are those with an immediate family member who dies while on active duty. They’re entitled to a $100,000 survivor benefit and up to $400,000 if the service member is enrolled in the military’s life insurance plan.

As an Army civilian financial counselor at Joint Base McGuire-Dix-Lakehurst in New Jersey, Craffy worked for an office that administered those survivor benefits.  

His job was to provide survivors with financial information without offering an opinion on what they should do with the money.

But according to court documents, he steered families toward investing in two private financial firms for which he worked, outside employment which he didn’t disclose to the Army.

Over a span of more than four years starting in 2018, Craffy obtained more than $9.9 million from Gold Star families, executing trades often without authorization, prosecutors said.

The victims’ accounts lost more than $3.4 million, while Craffy earned around $1.4 million in commissions, according to court documents.

He executed thousands of unauthorized securities trades with the funds, receiving lucrative commissions even when those trades resulted in substantial losses to families, court documents state.

“These Gold Star families deserve our utmost respect and compassion, as well as some small measure of financial security,” Phillip Sellinger, the U.S. attorney for the District of New Jersey, said in the statement. “There is no room for those who seek to rip off families of fallen service members to make a buck.”

In one scheme, Craffy defrauded a widow whose husband died in 2019 while serving at Fort Carson, Colo., describing himself as a “wealth manager” rather than a financial counselor, according to his indictment.

The woman told Craffy she wanted to invest her $400,000 benefit in conservative funds for her mother’s retirement and for her children’s college expenses.

Instead, he persuaded her to invest the money into stocks he controlled, with the promise that she could expect to accrue $1 million in seven years.

Craffy had her sign a prefilled application that, unknown to her, falsely stated her net worth and investment risk tolerance, according to court documents.

The Justice Department did not say how much prison time Craffy faces if he is convicted.