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Lawmakers, fueled by the outcry of grief-stricken families who claim they were swindled by an Army employee, are pursuing legislation to strengthen military oversight of financial counselors assisting the survivors of deceased service members. The proposed amendment, which has received early bipartisan support, would require Defense Department financial counselors to provide records verifying their lack of conflicts of interest or potential improper gains from their positions upon hiring and annually thereafter. Currently, such vetting relies mostly on an honor system.
This congressional action followed a Washington Post report in February exposing the allegations made by four military families who accused an Army financial counselor of taking control of their life insurance funds through brokerage firms where he was also employed. These families claimed that he exploited their accounts, engaging in trades without their consent or consultation and personally profiting from hefty commissions.
Financial counselors are meant to assist military families, particularly in times of bereavement. When on-duty personnel pass away, their life insurance beneficiaries may receive payments of up to $600,000, along with related emergency assistance. However, advocates have warned that such benefits have made vulnerable populations targets for scams.
Representative Mikie Sherrill (D-N.J.), sponsor of the legislation, stated that Defense Department financial counselors should be held to the highest standards to ensure they provide sound guidance to service members and their families. Rep. Don Bacon (R-Neb.), a retired Air Force general supporting the amendment, emphasized its importance in preventing predatory financial practices.
There are approximately 400 financial counselors employed by the Defense Department, according to Glynnis Harvey, spokesperson for Rep. Sherrill.
The amendment has been approved by the House Armed Services Committee and added to the House version of the National Defense Authorization Act. After passing the House, it will need to be reconciled with the Senate’s version before its fate is determined.
The four military families alleging misconduct by Army employee Caz Craffy claim that he funneled their life insurance funds into investment firms where he worked on the side. Their accounts reportedly suffered a combined loss of $750,000 due to questionable trades and commissions.
Efforts to reach Craffy and his attorney were unsuccessful, as neither responded to requests for comment.
Natasha Bevard, widow of Rodney C. Bevard, who died by suicide in 2020 after a lengthy military career, expressed support for the legislative effort. She hopes that no other Gold Star family will endure financial exploitation during their most vulnerable moments.
Army guidelines state that financial counselors are meant to educate and support their clients regarding benefits and estate planning, not handle their finances or profit from their relationship.
Advocates and affected families claim that the proposed legislation is necessary to address the Army’s lax vetting standards, which currently heavily rely on the honor system. While counselors are required to fill out annual disclosures reviewed by supervisors and ethics counselors to identify conflicts of interest, Army spokespersons admit that this information is taken at face value, with no independent verification unless there are indications of omission or ambiguity.
Sharon Hartz, mother of Sgt. Thomas F. Anastasio who died in January 2019, alleges that Craffy took control of investment accounts funded by her family’s life insurance payout, resulting in a loss of $200,000.
Craffy was fired from his New Jersey brokerage firm in November after a financial regulatory investigation into his conduct. Although FINRA’s findings do not indicate an admission or denial of wrongdoing, Craffy’s refusal to cooperate led to the revocation of his broker certification.
Craffy left the Army in January, prompting an internal review to ensure ethical and legal compliance among financial counselors. Army spokesperson Sgt. 1st Class Anthony Hewitt stated that the incident in question was an isolated case.
Natalie Khawam, an attorney representing nine families who suffered financial losses due to Craffy’s actions, urges Congress and the Pentagon to establish safeguards to prevent such incidents from recurring.
Correction: A previous version of this article incorrectly stated that the maximum life insurance payout for servicemembers who die while on duty was $500,000. As of March 1, the correct amount, as per the law, is $600,000, inclusive of the death gratuity. The article has been corrected.
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