Doctor and Office Manager Indicted in Scheme to Defraud Medicare, Manufacture and Distribute Fentanyl
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.
Michael Villarroel 48 Coronado, California
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
18 U.S.C. § 1349, Conspiracy to Commit Wire Fraud
Maximum Penalty: Twenty years in prison, $250,000 fine, forfeiture and restitution
Department of Veterans Affairs, Office of Inspector General
Federal Bureau of Investigation
Naval Criminal Investigative Service
Assistant U. S. Attorneys Peter Ko (619) 546-7359 and Mark Conover (619) 546-6763