A federal grand jury in San Diego has returned a superseding indictment charging U. S. Navy servicemembers Dr. Michael Villarroel, Paul Craig, and Christopher Toups with fraud, false claims, and conspiracy to defraud the United States.
In a statement, prosecutors said that the charges arose from a scheme where the defendants filed fraudulent claims to obtain unearned benefits from the Traumatic Servicemembers Group Life Insurance Program ("TSGLI").
The TSGLI program is an insurance program that compensates servicemembers who suffer serious and debilitating injuries while on active duty. The program is funded by fees paid directly by individual service members and the Department of Defense.
According to prosecutors, Dr. Villarroel, a commander in the U.S. Navy, was the medical doctor for the Explosive Ordinance Disposal Expeditionary Support Unit One ("EOD ESU One") from March 2010 through May 2013. In that capacity, the government alleged, Dr. Villarroel knowingly signed off on false and fraudulent TSGLI applications on behalf of multiple servicemembers who were part of or connected to EOD ESU One.
Both Mr. Toups, a former Chief Petty Officer Construction Mechanic, and Mr. Craig, a former Lt. Commander in the U.S. Navy, filed fraudulent TSLGI applications, according to prosecutors. To support their applications, they allegedly submitted fabricated applications that included forged signatures and altered hospital records. According to the superseding indictment, Mr. Craig fraudulently collected $150,000 and Mr. Toups collected at least $100,000.
Three other individuals previously indicted in connection with this alleged scheme – Richard Cote, Earnest Thompson, and Kelene Meyer – have pleaded guilty to conspiracy to commit wire fraud and, as part of their plea, admitted that the conspirators defrauded the TSGLI program of nearly $2 million. According to the plea agreement, Meyer, a former nurse in the U.S. Navy, stated that Mr. Toups, Dr. Villarroel, and she received kickbacks for creating and filing the fraudulent TSGLI applications for other U.S. Navy servicemembers.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].