MIL-OSI Security: Former U.S. Navy Doctor Sentenced for Perpetrating a $2 Million Insurance Fraud Scheme

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Source: Federal Bureau of Investigation (FBI) State Crime Alerts (b)

SAN DIEGO – Dr. Michael Villarroel, who at the time of his crimes was a doctor in the U.S. Navy, was sentenced in federal court today to one year and one day in custody after admitting that he and others participated in a scheme to file false claims to obtain unearned benefits from an insurance program that compensates service members who suffer serious and debilitating injuries while on active duty. He was also ordered to pay $180,000 as criminal forfeiture. A restitution hearing is scheduled on April 2.

Villarroels’ sentence followed his guilty plea to conspiracy to commit wire fraud. According to his plea agreement, participants in the scheme obtained approximately $2 million in payments from fraudulent claims submitted to the insurance program – Traumatic Servicemembers Group Life Insurance Program, or TSGLI.

Villarroel admitted that from 2012 to at least December 2015, he conspired with other members of the Navy to obtain money from the United States by making claims for life insurance payments based on exaggerated or fake injuries and disabilities. Villarroel certified that he reviewed the records and determined the injuries were legitimate when in fact he knew they were fake or exaggerated. At times Villarroel falsely stated that he interviewed the claimant and provided others service members actual medical records to be used in fabricating claims. Villarroel knew the claims were false but he signed off on them to receive kickbacks once the fake injuries resulted in insurance payouts.

“As fraudulent schemes go, this one was egregious,” said U.S. Attorney Tara McGrath. “Today the defendant found out there is a high price to be paid for pocketing money intended for injured and traumatized servicemembers.”

“Fraudulent activities compromise the integrity of government programs and services and divert compensation from deserving recipients,” said Special Agent in Charge Rebeccalynn Staples with the Department of Veterans Affairs Office of Inspector General’s Western Field Office. “This sentence holds the defendant accountable for his dishonest actions, and the VA OIG will continue to work tirelessly with our law enforcement partners to ensure schemes like this are uncovered, investigated, and prosecuted to the fullest extent of the law.”

“Michael Villaroel’s blatant abuse of his position of trust within the United States military is unscrupulous and this sentencing proves that such actions will not be tolerated,” said FBI San Diego Acting Special Agent in Charge John Kim. “The FBI and its law enforcement partners remain committed to aggressively disrupt, and, ultimately, bring to justice anyone who defrauds the United States government.”

“Dr. Villarroel betrayed his oath to the Navy and has been held to account for his role in a scheme that diverted more than $2 million in critical resources away from wounded service members recovering from traumatic injuries,” said Special Agent in Charge Greg Gross of the NCIS Economic Crimes Field Office. “NCIS and our partners are committed to rooting out corruption that threatens the safety and wellbeing of our service members and their families.”

The Traumatic Servicemembers Group Life Insurance (TSGLI) program was administered by Prudential for the Navy and funded by servicemembers and the Department of the Navy. TSGLI provided financial assistance to servicemembers recovering from traumatic injuries.

According to court records, Villarroel’s co-defendants were part of the Explosive Ordinance Disposal Expeditionary Support Unit One (“EOD ESU One”) based in Coronado, California.

Assistant U.S. Attorneys Peter Ko and Mark Conover for the Southern District of California are prosecuting the case.

DEFENDANT                                 18CR1674-JLS
Michael Villarroel                            51                                 Coronado, California

RELATED CASES
Kelene Meyer                              18CR1674-JLS               Jacksonville, FL
Christopher Toups                       18CR1674-JLS               White, GA
Paul Craig                                    18CR1674-JLS               Austin, TX
Richard Cote                                18CR1674-JLS              Oceanside, CA
Earnest Thompson                       18CR1674-JLS              Murrieta, CA
Ronald Olmsted                           20CR0659-JLS               Mobile, AL
Anthony Coco                              20CR0197-JLS               San Diego, CA
Stephen Mulholland                     20CR0052-JLS               Panama City Beach, FL

SUMMARY OF CHARGES
18 U.S.C. § 1349, Conspiracy to Commit Wire Fraud
Maximum Penalty: Twenty years in prison, $250,000 fine, forfeiture and restitution
Others:
18 U.S.C. § 1349, Conspiracy to Commit Wire Fraud
Maximum Penalty: Twenty years in prison, $250,000 fine, forfeiture and restitution
18 U.S.C. § 1343, Wire Fraud
Maximum Penalty: Twenty years in prison, $250,000 fine, forfeiture and restitution
18 U.S.C. § 287, Making a False Claim
Maximum Penalty: Five years in prison, $250,000 fine

AGENCIES
Federal Bureau of Investigation
Naval Criminal Investigative Service
Department of Veterans Affairs – Office of Inspector General

MIL Security OSI