An aerial view on May 4, 2023, of a Navy Enterprise Tactical Command and Control tent configuration used by Explosive Ordnance Disposal Group 1 during a Navy exercise at Naval Amphibious Base Coronado, Calif. (Sara Eshleman/Navy)
WASHINGTON – A former Navy doctor was sentenced to 12 months in federal prison for falsifying insurance claims that defrauded a military insurance program of $2 million, according to the U.S. Attorney’s Office in the Southern District of California.
Dr. Michael Villarroel, 51, admitted to participating with other service members in a scheme to file phony claims of serious injury and disability with the Traumatic Servicemembers Group Life Insurance Program.
The insurance program pays out benefits to service members who have suffered serious injuries as a result of their military service. The benefits are considered essential financial assistance for injured troops.
A restitution hearing for Villarroel has been scheduled for April 3 following his sentencing Jan. 12. He was also ordered to pay $180,000 in criminal forfeiture.
Villarroel admitted in federal court that he conspired with other members of the Navy to make up and submit claims about injuries and disabilities that were exaggerated or did not exist. The fraudulent activities took place between 2012 and 2015.
Villarroel’s role was to certify the false records to make the claims of injuries and disabilities look legitimate, the U.S. Attorney’s Office said.
“As fraudulent schemes go, this one was egregious,” U.S. Attorney Tara McGrath said. “The defendant found out there is a high price to be paid for pocketing money intended for injured and traumatized service members.”
Villaorroel said he knew the claims were falsified with the express purpose of collecting the insurance payouts. He received kickbacks after the insurance payments were received, the U.S. attorney’s office said.
“At times Villarroel falsely stated he interviewed the claimant and [he] provided other service members actual medical records to be used in fabricating claims,” according to a statement from the U.S. attorney’s office.
Villarroel faced two charges of conspiracy to commit wire fraud, one charge of wire fraud, and one charge of making a false claim.
Villarroel’s co-defendants included members of the Explosive Ordnance Disposal Expeditionary Support Unit One, based in Coronado, Calif. Villarroel served as a medical doctor at the unit and was a Coronado resident.
Christopher Toups, a former Navy chief petty officer who worked as a mechanic with the unit, admitted to being the orchestrator of the insurance fraud scheme.
He was sentenced in October to more than two years in federal prison. He pleaded guilty to conspiring to commit wire fraud. Toups had agreed to a plea deal that involved the dismissal of charges for fraudulent claims and wire fraud in exchange for his guilty plea.
Toups’ former wife, Kelene McGrath, and other sailors faced similar charges. McGrath is a former Navy nurse. She altered medical records to create phony injuries or disabilities, the U.S. attorney’s office said.
Villarroel certified the records with a determination there was impairment that interfered with daily living.
The FBI, Naval Criminal Investigative Service and the Department of Veterans Affairs’ Office of Inspector General were involved in the investigation.
