A former financial adviser to the U.S. Army has pleaded guilty to defrauding grieving Gold Star families of millions of dollars worth of life insurance proceeds, the Justice Department announced Tuesday.
Kaz Claffey, 41, of New Jersey, faces six counts of wire fraud, one count each of securities fraud, making false statements on a loan application, acts affecting a person’s financial interests, and making false statements to a federal agency. pled guilty to the crime.
If convicted, he could face eight to 10 years in prison under guidelines recommended by the federal government. He also agreed not to appeal a sentence within that range and to pay full restitution.
If a military member dies while on active duty, his or her surviving Gold Star family is entitled to a $100,000 payout, and the servicemember is entitled to up to $400,000 in life insurance.
From November 2017 to January 2023, Claffey was responsible for providing general financial education to Gold Star families, but instead used his position to provide support to these vulnerable families. “Targeted,” court documents said.
“While the tremendous loss suffered by Gold Star families cannot be undone, the Department of Justice will do everything in its power to protect them from further harm,” Attorney General Merrick Garland said in a statement.
The 41-year-old was an Army employee, working as a financial counselor for the Office of Victim Services and was a major in the Army Reserve.
Court filings state that individuals are prohibited from giving personal opinions regarding beneficiaries’ funds and are not permitted to “personally participate in any government matter in which they have an outside financial interest.” It says “No.”
Claffey admitted that he encouraged Gold Star family members to invest in accounts he managed while working outside the company at two separate financial investment companies. The families mistakenly believed that this was done with permission from the military.
From May 2018 to November 2022, Claffey defrauded beneficiaries of more than $9.9 million.
He used the money to trade without his family’s permission, earning Claffey high commissions.
The Gold Star family account lost more than $3.7 million, but Claffey made more than $1.4 million in fees taken from the account.
William S. Walker, Acting Special Agent in Charge of Homeland Security Investigations (HSI) in Newark, said, “Mr. Claffey allegedly took advantage of military families during a vulnerable time of grieving and was not trusted to care for them.” I was ashamed of my position.”
Mr. Claffey will make his argument before U.S. District Judge Georgette Kasner in Trenton, New Jersey, and is scheduled to be sentenced on August 21.
