U.S. Navy Service Members Sentenced in Sweeping Corruption and Insurance Fraud Scheme

DEFENDANTS AND CHARGES Case Number Age Hometown

Christopher Toups 18CR1674-JLS 43 Woodstock, GA

Kelene Meyer 18CR1674-JLS 44 Jacksonville, FL

Dr. Michael Villarroel 18CR1674-JLS 48 Coronado, CA

Paul Craig 18CR1674-JLS 47 Austin, TX

Richard Cote 18CR1674-JLS 45 Oceanside, CA

Earnest Thompson 18CR1674-JLS 46 Murrieta, CA

James Brown 18CR1674-JLS 46 San Diego, CA

David Hawley 18CR1674-JLS 51 San Diego, 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

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

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

The charges arise from a scheme led by co-defendant Christopher Toups, who according to plea agreements and an indictment, recruited Olmsted, Coco, and a number of other fellow service members he met through his work in the Navy. According to court documents, Toups helped these coworkers to create and file fraudulent claims to obtain unearned benefits from Traumatic Servicemembers Group Life Insurance Program, or TSGLI, an insurance program that compensates service members who suffer serious and debilitating injuries while on active duty. He had help from U.S. Navy Commander Dr. Michael Villarroel, the medical doctor for the unit where Toups worked, and from Kelene Meyer, a former nurse in the U.S. Navy who was married to Toups during the scheme.

According to the superseding indictment and other court records, including Olmsted’s and Coco’s plea agreements, the co-defendants were part of the Explosive Ordinance Disposal Expeditionary Support Unit One (“EOD ESU One”), based in Coronado, California. Christopher Toups, a former Chief Petty Officer Construction Mechanic, filed his own fraudulent claims, and collected kickbacks from the participants he recruited once their fraudulent TSGLI benefits were paid. Dr. Villarroel knowingly signed off on false and fraudulent TSGLI applications on behalf of multiple service members that were part of or connected to EOD ESU One. To support their applications, each defendant submitted fabricated applications that included forged signatures and altered hospital records, which Meyer helped to create.

Relevant to today’s hearings, Ronald Olmsted admitted in his plea agreement to submitting two separate fraudulent claims, for which he received a total payout from TSGLI of $175,000. Olmsted’s claims falsely reported that he lost the ability to do basic tasks and care for himself for months after a rappelling accident in 2011 and a fall down a flight of stairs in 2012. Olmsted kicked back $55,000 to Toups, some in cash and some in cashier’s check. Coco, for his part, admitted that he was paid $100,000 after falsely reporting on medical forms that he suffered a fall from a piece of equipment that broke both his ankles and left him confined to a wheelchair. After he received the unwarranted payout from TSGLI, Coco kicked back $65,000 to Toups, paid all in cash.

>https://www.justice.gov/usao-sdca/pr/us-navy-service-members-sentenced-sweeping-corruption-and-insurance-fraud-scheme