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

Assistant U.S. Attorneys Emily W. Allen (619) 546-9738 and Andrew Galvin (619) 546-9721

NEWS RELEASE SUMMARY – October 23, 2020

SAN DIEGO – Two U.S. Navy service members caught in a sweeping corruption case involving false claims to the Traumatic Servicemembers Group Life Insurance Program were sentenced in federal court today.

Ronald Olmsted and Anthony Coco, who each entered guilty pleas earlier this year, were sentenced by U.S. District Judge Janis L. Sammartino.  Olmsted was sentenced to four months in prison followed by four months of home detention to be served as part of three years of supervised release.  Coco was sentenced to four months of home detention to be served as part of three years of probation.

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.

To date, 11 individuals have been charged in connection with this scheme.  Seven of those individuals – Richard Cote, Earnest Thompson, Kelene Meyer, Paul Craig, and Stephen Mulholland, as well as Olmsted and Coco – have pleaded guilty to fraud charges.  According to court records, Toups, Villarroel, and Meyer were at the center of the scheme, and together the conspirators defrauded the TSGLI program of nearly $2 million.   Toups, Villarroel, and Meyer received kickbacks for creating and filing the fraudulent TSGLI applications for other U.S. Navy service members.   

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  

AGENCIES

Federal Bureau of Investigation

Naval Criminal Investigative Service

Department of Veterans Affairs - Office of Inspector General

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.