SEC v. Caz L. Craffy — U.S. Securities and Exchange Commission Litigation Release No. 26363, dated July 29, 2025.
The SEC obtained a final judgment against Caz L. Craffy, a former Army financial counselor who defrauded Gold Star families and other clients. Craffy engaged in unauthorized and excessive trading, recommending high-risk strategies that did not match his clients' investment profiles, leading to significant losses. He was sentenced to prison in a parallel criminal proceeding.
In Plain English
Imagine someone you trusted to help manage your money, especially after a difficult time, instead took advantage of you. This person, Caz Craffy, was supposed to help military families, including those who lost loved ones. Instead, he moved their money into investment accounts he controlled and made risky trades without permission. These trades often lost money for the families and made a lot of money for him in fees. He has since been sentenced to prison for his actions.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Gain Trust as Financial Counselor Caz L. Craffy worked full-time as a U.S. Army financial counselor, tasked with helping military families, including Gold Star families who received survivor benefits. He also worked full-time for private brokerage firms but did not disclose this to the Army.
- Target Grieving Families Craffy exploited the grief and financial inexperience of at least 29 Gold Star family members, convincing them to transfer their survivor and insurance payments, which could be as much as $500,000, into brokerage accounts he managed.
- Misappropriate Funds Craffy allegedly misappropriated $50,000 from a thirteen-year-old customer's Individual Retirement Account, causing these funds to be lent to him personally.
- Execute Unauthorized Trades Once funds were transferred, Craffy engaged in unauthorized trading in customer accounts. These accounts were not discretionary, meaning he needed explicit customer approval for each trade, which he often did not obtain.
- Recommend Unsuitable Strategies Craffy recommended excessive trades and high-risk strategies that did not match his customers' investment profiles or their primary goals of preserving funds for education or retirement.
- Hide Trades from Clients To conceal his unauthorized trading activities, Craffy actively hid his trades from his customers, even directing them not to look at their account statements.
- Generate Excessive Fees The excessive trading generated substantial fees and commissions, with approximately $1.64 million of the realized losses attributed to these charges, most of which were paid directly to Craffy.
- Cause Significant Losses As a result of unauthorized and unsuitable trading, Craffy's customers suffered realized losses of approximately $1.79 million and unrealized losses of approximately $1.8 million.
The Enforcement Action
On September 4, 2024, the SEC obtained a judgment against Caz L. Craffy. In a parallel criminal proceeding, Craffy was sentenced to 151 months in prison and ordered to pay $1,482,741.41 in forfeiture and $4,085,988.32 in restitution. In light of the criminal sentence, forfeiture, and restitution, the SEC advised the Court that it does not intend to pursue its remaining monetary claims, and the Court ordered this on July 16, 2025, concluding the SEC's litigation.
Named in this action: Caz L. Craffy.