SAN DIEGO – A federal grand jury in San Diego returned a superseding indictment today that charges U. S. Navy servicemembers Dr. Michael Villarroel, Paul Craig, and Christopher Toups with fraud, false claims and conspiracy to defraud the United States. The charges arise from a scheme where the defendants filed fraudulent claims to obtain unearned benefits from the Traumatic Servicemembers Group Life Insurance Program (“TSGLI”).
According to the indictment, 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 the superseding indictment, Dr. Michael 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, Dr. Villarroel knowingly signed off on false and fraudulent TSGLI applications on behalf of multiple servicemembers that were part of or connected to EOD ESU One. Both Christopher Toups, a former Chief Petty Officer Construction Mechanic, and Paul Craig, a former Lt. Commander in the U.S. Navy, filed fraudulent TSLGI applications. To support their applications, each defendant submitted fabricated applications that included forged signatures and altered hospital records. According to the superseding indictment, Craig fraudulently collected $150,000 and Toups collected at least $100,000.
In addition to Christopher Toups, four other individuals were previously indicted in connection with this scheme. Three of those individuals – 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 Toups, Villarroel, and she received kickbacks for creating and filing the fraudulent TSGLI applications for other U.S. Navy servicemembers.
DEFENDANTS Case Number: 18CR1674
Dr. Michael Villarroel Age: 47 Coronado, California
Paul Craig Age: 46 Austin, Texas
Christopher Toups Age: 42 Woodstock, GA
SUMMARY OF CHARGES
Count 1: 18 U.S.C. § 1349, Conspiracy to Commit Wire Fraud; Maximum Penalty 20 years in prison, $250,000 fine, forfeiture and restitution.
Counts 2-4: 18 U.S.C. § 1343, Wire Fraud; Maximum Penalty 20 years in prison, $250,000 fine, forfeiture and restitution
Counts 5-7: 18 U.S.C. § 287, Making a False Claim; Maximum Penalty 5 years in prison, $250,000 fine
Federal Bureau of Investigation
Naval Criminal Investigative Service
Veteran Affairs for the Office of Inspector General
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.