Former U.S. Navy doctor sentenced for perpetrating $2M insurance fraud scheme

By SDCN Editor 

San Diego, CA–A former United States Navy doctor was sentenced to prison for his role in a $2 million insurance fraud scheme, federal authorities said.

Dr. Michael Villarroel was sentenced in federal court 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 for 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

Villarroel admitted that from 2012 to at least December 2015, he conspired with other members of the Navy to obtain money from the U.S. by making claims for life insurance payments based on exaggerated or fake injuries and disabilities. He 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 other service members with 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.”

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

According to court records, Villarroel’s co-defendants were part of the Explosive Ordnance Disposal Expeditionary Support Unit One based in Coronado, California.

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