Exposed: Deception in Financial Counseling


Financial crime, exemplified by Caz Craffy’s deceitful actions, remains a prevalent threat within the financial counseling system, highlighting the importance of vigilance and skepticism.

In today’s episode of Retire in Texas, PAX Financial Group CEO and Co-Founder, Darryl Lyons, delves into a poignant account of financial crime affecting military families. He shines a light on the story of Natasha Bovard, a widow grappling with the aftermath of her husband’s tragic passing. Darryl discusses the critical support provided by the Department of Veterans Affairs to families of fallen soldiers and reveals how this system was exploited by unscrupulous individuals like Caz Craffy. Listeners will gain insights into the specific violations committed by Caz Craffy, who misrepresented his role and misled vulnerable clients, specifically Gold Star Families, for personal gain. 

Today’s show highlights include:

*An introduction of Natasha Bovard, who’s the widow of a US soldier, and the challenges she faced post-military life.

*Details about the financial assistance provided to families of fallen soldiers by the Department of Veterans Affairs.

*Insights into Gold Star Families and the exploitation of financial counseling services by Caz Craffy.

*A description of Caz Craffy’s fraudulent actions, setting up a separate investment firm to deceive clients into unauthorized investments..

*Lessons learned emphasizing the importance of vigilance and due diligence when engaging with financial advisors.

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Exposed: Deception in Financial Counseling


Hey, this is Darryl Lyons, CEO and co-founder of PAX Financial Group. Thanks for tuning in to Retire in Texas. This information is general in-nature only. It’s not intended to provide specific investment, tax, or legal advice. Visit PAXFinancialGroup.com for more information. 

So, we’re going to do another fin crime – financial crime episode. Want to start out with a story about one of the victims. Her name’s Natasha Bovard. Her husband Rodney, he was a career soldier for our country. And as we know, many that get back to the States and get their feet on the ground, many of them struggle getting acclimated to the civilian life and suffer from PTSD, and Rodney was no exception. He took his own life in 2020. 

So as a result of his death, the Department of Defense assigns counselors, financial counselors actually, to help Natasha navigate through this. She needed one. She didn’t know what to do. And single mom now, as you can imagine, not exactly able to navigate all the nuances of the financial world. Just trying to go one step at a time. 

It’s important for you to know that the families of lost soldiers get something from the Service Members Life Insurance Program administered by the Department of Veterans Affairs. They get $400,000, this is tax free, by the way, and another $100,000 to cover immediate needs and loss of income. So it’s a total of about $500,000.

So, Natasha received probably about a $500,000, obviously don’t know the details if there were a little nuances here and there, but $500,000. Again, the details aren’t provided, but she probably squirreled some of that money aside for emergency funds, maybe to pay off debt, maybe buy a new car. And then, she decided to invest $370,000. So she invested $370,000 with one of the financial counselors that was assigned to her.

The problem is these financial counselors were not investment advisors. They were not supposed to give advice. They are not supposed to give advice. They are not supposed to give opinions. But, this particular financial counselor that was assigned to her gave her recommendations on what to do with $370,000. And I’ll talk about how he did this in just a minute.

But you can imagine how she felt when she realized that she was being swindled, just trying to keep her family together. You can go online and see Natasha Ballard’s GoFundMe page. She has a beautiful family. The money was for the kids and she lost of that $370,000 invested, $200,000. 

The Casualty Assistance Office for the Department of Defense really wants to help families of the missing, of the unknown, don’t know where they’re at. They die. Illness. All kinds of support. But again, it’s only basic information from these counselors. It’s no advice, no opinions about investments. And again, they get that, what we call, Service Members Life Insurance Program. It’s $500,000. Natasha was part of a family called the Gold Star Family. This label, for lack of a better word, dates back to World War one.

Military families. They displayed service flags featuring a blue star for every immediate family member serving in the armed forces. But the star’s color would be changed to gold if the family lost a loved one in the war, hence the term Gold Star Family. And in 1936, FDR, he built upon this growing movement to honor the mothers of deceased service members and designated the last Sunday of September as National Gold Star Mother’s Day.

Gold Star families get a financial counselor. Natasha was assigned a counselor by the name of Caz Craffy. Craffy misled her, lied, and stole from her and many other families too. Caz was assigned at a base in New Jersey right out of Lakehurst. It’s a joint base. Dix-McGuire-Lakehurst. This old base, historical roots going back to 1921, a very important joint mission that still exists today.

Caz was assigned this role given the fact that he was a major in the Army Reserves and had enough energy to continue to work hard. He’s 41 years old and some life experience, so he fit the role of a financial counselor real well. But then this scheme came up, I guess, in his mind, in his head, I don’t know where he got the idea from, but he would steal from the families of our fallen soldiers.

It’s utterly disgraceful. He would steal from families assigned to him, and then he would go through the database of the army and identify those soldiers who died, and he would deliberately target the families of the victims. 

I’ll kind of break it down in some of the legal framework of how and why –  not why so much. The why? I don’t know if I’ll ever understand why somebody would do something like this, But legally, these are some of the, I guess, I have four bullet points here to just kind of talk through financial terminology, more legal terminology of what he did.

The first one was misappropriation. So this is something that he did. Let me give you an example. I can’t believe he did this. Craffy, misappropriated $50,000 from a 13 year old customer’s IRA. From a 13 year old IRA. He orchestrated a loan against it for Craffy’s own benefit. I mean, you may ask, how does a 13 year old get an IRA?

Well, you have to have earned income to put money in an IRA. None of the documents expressly disclose how the titling was, but it’s very likely it was an inherited IRA. So he borrowed against this inherited IRA that belonged to a 13 year old whose parent had passed away. I mean, evil does exist. 

The next one, number two. This one may not seem like a big deal, but this is important for you to just kind of digest as you work with financial people. Failure to impose best interest. Failure to impose best interest.

So, the first financial legal term I wanted to share with you was misappropriation. And the second one is the phrase failure to impose the best interest. So whenever you fill out a financial application, you have to, and you’ve seen these before if you’re a PAX client, we have to put a profile of who you are on there.

What’s your time horizon? What’s your trading strategy? What’s your net worth? These are all factors that put boundaries on the advisor and the client for which investments are suitable. And if an investment is applied to the portfolio and it’s outside those boundaries, it’s not allowed. And Caz knew that many of these clients, these widows and orphans, they had not a high net worth.

He often put $1 million on there, plus. They had a very short term time horizon. And he always, I say always, I don’t know this to be true, but he did falsely state on many applications that the trading strategy was aggressive. He even falsified that they had more than five years experience. And what he told clients that would ask about it, he said, well, the reason I do this is because I want the most flexibility to buy securities for you.

This is kind of a big deal in our industry. The failure to impose the best interests of the clients, it’s got to be taken seriously. It’s boundaries. 

Number three, excessive trading. You can imagine what this is. On at least four accounts, he had no discretionary authority. Discretionary authority means that the advisor has the authority to move things around. And it’s a convenience factor because you can imagine if we wanted to, many advisors wanted to place a trade in the middle of the day, and we had to call and confirm that it was okay, and you’re at work or you’re picking up the kids from school. It just doesn’t work. It’s just inefficient. So you give us, or you give an advisor discretionary authority.

That’s pretty common. We work within these boundaries. And at least PAX, we don’t have any fees or commissions when we trade. It just takes away that conflict. Well, he did. He did not get authorization for discretionary authority, first of all. But he went ahead and placed trades on his client’s accounts without their permission. And these trades generated fees and commissions for him personally.

Number four, concentration and lack of diversification. So he did invest in securities like Bitcoin, like AMC and GameStop. And if you haven’t seen that movie, Dumb Money, definitely not PG, but it explains this whole meme stock world that exists out there. And apparently Caz was into that kind of stuff, which is very speculative and does not follow the rules of diversification, which we’ve talked about on this show quite a bit.

So those are the four, they’re not the charges, these are the violations. The charges are wire fraud and other things. And we’ll talk a little bit about that. But these are just the violations, the misappropriation of money. He did falsify loan documents. Number two, failure to impose best interest. He falsified the boundaries. Number three, excessive trading and number four, concentration and lack of diversification.

Another lady. This is another example. A victim, Sharon Hartz, whose son, his name was Sergeant Thomas Anastacio, and he died in January 2019. She said that the Army was amazing at supporting her after her son’s death. She met Craffy, this guy, days after her son’s funeral and they actually became friends. Caz actually invited her, Sharon, to his wedding.

She said he was smart and charismatic. Charismatic. Ding ding ding. Like, if I hear charismatic, I start to get a little nervous. And she trusted him. She to this day, obviously is a victim of this crime and feels terribly guilty because her son was very intentional about his life insurance proceeds. He even made adjustments to his life insurance proceeds prior to his death to make sure that his siblings would be taken care of, and Caz stole from them.

Total losses about 29 families, 1.79 were realized. Those are gone forever, and 1.64 were in commissions and fees. So what did he do? How did he do this? What he did was he would get the victims from the Department of Defense through this financial counseling program. And then he took a job at a financial advisory firm and actually set up another financial advisory company.

I think he did most of his work through this financial advisory firm. And so, he would take the paperwork from this financial advisory firm and kind of put it inside, so to speak, of the financial counselor paperwork. So people were not clear about, and I guess they didn’t look. You know, I can’t blame them. These are people that are devastated.

They didn’t identify that this set of paperwork that he was delivering to them was completely different and wasn’t within the Department of Defense. It was a separate firm. So he would get them to sign this paperwork authorizing these accounts. They would write a check, and then he would submit these applications to his investment firm. And this investment firm thought, wow, Caz is really creative.

He’s able to really serve this Army community because he’s a reserve. So they thought that he had a natural market. Now they failed on many accounts. But these two entities, the Financial Counseling Agency from the Army, had no idea he had an investment firm. And the investment firm had no idea he was a financial counselor. And if they would have done some digging, they could have figured this out. But it was way too late, and there was too many families that lost hundreds of thousands of dollars. And their lives are forever changed. 

It’s really sad that this happened. In fact, this is still getting resolved. We’re in April of 2024, and the latest news is he has admitted to all of these charges, which includes wire fraud, securities fraud, making false statements, having a criminal conflict.

This stuff will send him to prison. Securities fraud alone is 20 years. He’s obviously barred from the industry. And there is legislation right now to hold military financial counselors accountable for what they do. And I would imagine, I hope that there’s better systems and processes to prevent this from ever happening again. 

So this is a devastating story. It saddens me and angers me, especially being a Military City. This hits close to home. I hope that you can just be very vigilant as you engage with anybody in the financial world. To double check. Ask questions. Caz at one point told his victims, don’t look at the statements because what he was doing was wrong. He didn’t want to get busted.

He finally got busted, and unfortunately, there will be another financial fraud case out there somewhere. I just pray that it’s not in any of you. In the meantime, stay diligent. Trust, but verify and remember you think different, when you think long term. Have a great day

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