NEWS RELEASE SUMMARY — This is an official press release from the U.S. Department of Justice (USAO - California, Southern), published as received.

NEWS RELEASE SUMMARY – March 28, 2023

SAN DIEGO – Dr. Michael Villarroel, a U.S. Navy doctor, pleaded guilty today in federal court, admitting that he and others conspired to defraud the Navy by faking or exaggerating injuries to obtain insurance payments intended to help service members recovering from traumatic injuries. Villarroel acknowledged he knew the claimed injuries were false or exaggerated but signed off on applications for a share of the insurance payments.

Participants in the scheme obtained about $2 million in payments from the Traumatic Servicemembers Groups Life Insurance (TSGLI) program which is funded by service members and the Navy. Villarroel personally obtained more than $180,000 in kickbacks.

“These military healthcare dollars, which were intended to benefit injured and traumatized service members, instead funded a fraudulent windfall,” said U.S. Attorney Randy Grossman. “The U.S. Attorney’s Office and our agency partners will relentlessly pursue justice for victims of fraud schemes that harm our service members and taxpayers.” Grossman thanked the prosecution team and investigating agencies for their excellent work on this case.

Villarroel admitted that from 2012 to at least December 2015, he conspired to commit wire fraud with Christopher Toups, a chief petty officer construction mechanic in the Navy; Kelene Meyer, Toups’ spouse and a nurse; and others. Toups prodded other service members to submit claims, told them to provide medical records to Meyer, requested part of the insurance payment in return, and distributed shares to Meyer and Villarroel. Meyer used her medical background to falsify or doctor supporting records to reflect fake or exaggerated injuries.

Villarroel claimed to have reviewed medical records and verified disabilities consistent with the injuries as needed for claims to be processed and qualify. At times Villarroel supported his determination by falsely stating he interviewed the claimant. At other times Villarroel gave Meyer medical records belonging to others to use in fabricating claims. Toups paid Villarroel in cash and by cashier’s check and, at points, Villarroel conducted transactions in amounts under $10,000 to evade currency transaction reporting requirements.

Villarroel is the tenth defendant to plead guilty to crimes committed under the scheme. Several conspirators were members of Explosive Ordinance Disposal Expeditionary Support Unit One (“EOD ESU One”), based in Coronado, California.

“Dr. Villarroel defrauded the Navy and the U.S. taxpayer by participating in a reprehensible scheme to wrongly obtain more than $2 million that should have been directed to wounded service members,” said Acting Special Agent in Charge Michael D. Butler II of the NCIS Economic Crimes Field Office. “NCIS and our partners remain committed to investigating all allegations of fraud that harms Department of the Navy service members and their families.”

“Dr. Villarroel abused his position of trust to enrich himself and his co-conspirators,” said Special Agent in Charge Stacey Moy of the FBI’s San Diego Field Office. “As a medical doctor and Naval Commander, Dr. Villarroel is held to a higher standard which makes this scheme to defraud the Traumatic Service Members Group Life Insurance program even more egregious. The FBI would like to thank our partners at Veterans Affairs – Office of Inspector General and Naval Criminal Investigative Service for their tremendous partnership on this case.”

“Fraudulently filing claims for unearned TSGLI benefits diverts compensation from deserving service members who suffered serious and debilitating injuries while on active duty,” said Special Agent in Charge Rebeccalynn Staples of the Department of Veterans Affairs Office of Inspector General’s Western Field Office.  “The VA OIG thanks the United States Attorney’s Office and our law enforcement partners for their efforts in bringing this defendant to justice.”

Villarroel is scheduled to be sentenced on June 16 at 9 a.m. by U.S. District Judge Janis L. Sammartino.

DEFENDANT           18CR1674-JLS

Michael Villarroel      48        Coronado, California

RELATED CASES

Kelene Meyer                         18CR1674-JLS                       44                    Jacksonville, FL

Christopher Toups                  18CR1674-JLS                       43                    Woodstock, GA

Paul Craig                               18CR1674-JLS                       47                    Austin, TX

Richard Cote                           18CR1674-JLS                       45                    Oceanside, CA

Earnest Thompson                  18CR1674-JLS                       46                    Murrieta, CA

Ronald Olmsted                      20CR0659-JLS                       48                    Mobile, AL

Anthony Coco                         20CR0197-JLS                       43                    San Diego, CA

Stephen Mulholland               20CR0052-JLS                       51                    Panama City Beach, FL

Roy Sedano                             21CR1493-JLS                       44                    Spring Valley, CA

CHARGES

18 U.S.C. § 1349, Conspiracy to Commit Wire Fraud

Maximum Penalty: Twenty years in prison, $250,000 fine, forfeiture and restitution

AGENCIES

Department of Veterans Affairs, Office of Inspector General

Federal Bureau of Investigation

Naval Criminal Investigative Service