Navy doctor sentenced for ‘egregious’ $2 million fraud scam

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A Navy doctor has been sentenced in federal court for conducting a $2 million insurance fraud scheme, the U.S. Attorney’s Office for the Southern District of California recently announced.

Cmdr. Michael Villarroel earned a sentence of one year and one day in custody on Friday, the attorney’s office said in a statement, adding that he was also ordered to pay back as criminal forfeiture the $180,000 in kickbacks he obtained.

Together, he and his co-conspirators scammed approximately $2 million in payments from 2012 to at least December 2015 through fake or exaggerated claims submitted to a life insurance program that compensates service members who suffer serious and debilitating injuries while on active duty.

The military medical professional pleaded guilty to the crime last March.

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

According to the feds, Villarroel certified he reviewed the records and determined the injuries were legitimate when he knew they were actually fraudulent, at times providing other service members’ actual medical records to be used in fabricating claims.

A service record provided to Military Times on Wednesday shows Villarroel remains in the active-duty Navy and has been attached since 2018 to an Explosive Ordnance Disposal Expeditionary Support Unit based in Coronado, California.

Some of Villarroel’s co-defendants have also been sentenced for their actions, including Christopher Toups, a former chief petty officer in the Navy who also served with an EOD unit in California.

Toups received a federal court sentence to 30 months in prison for his part in the insurance fraud scam, federal officials announced in October.

Toups paid Villarroel in cash and by cashier’s check, the attorney’s office previously stated, adding that Villarroel also conducted transactions in amounts under $10,000 to evade currency transaction reporting requirements.

A restitution hearing for Villarroel is currently scheduled for April 2. His legal team did not immediately respond to Military Times’ request for comment.

Jonathan is a staff writer and editor of the Early Bird Brief newsletter for Military Times. Follow him on Twitter @lehrfeld_media

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