An ex-Navy chief petty officer pleaded guilty on Oct. 27 to participating in an insurance fraud scheme that stole $2 million from a program meant to aid seriously injured service members, according to a news release from the U.S. attorney’s office for the southern district of California.
The ex-sailor, Christopher Toups, 43, from Georgia, admitted to conspiracy to commit wire fraud, court documents show. He personally obtained about $400,000 between 2012 and Dec. 2015 by making fraudulent claims to the Traumatic Servicemembers Group Life Insurance Program.
Toups, a central figure to the plot, was aided in the scam by his then-wife, former Navy nurse Kelene McGrath, and Navy Dr. Michael Villarroel.
In addition to submitting his own claims based on fake injuries and disabilities, Toups encouraged numerous current and former Navy service members to follow suit, the release said. On numerous occasions, he told those submitting claims to provide medical records to McGrath, who reportedly exaggerated documented injuries or faked them entirely, before Villarroel certified them.
Some of the more outrageous claims included McGrath’s statement that she injured her shoulder by falling off of a horse. Another naval chief petty officer, Richard Cote, claimed to have fallen from a ladder while taking down Christmas lights, according to a 2018 indictment.
Toups’ brother Jason, a petty officer second class, was also mentioned in the first indictment for making false claims about a motorcycle accident. He is not mentioned in the plea agreement, however.
After getting payouts, Toups encouraged recipients to give him part of the money as a “processing fee,” which he shared with McGrath and Villarroel. The group kept transactions under $10,000 to “evade perceived financial reporting requirements,” the news release said.
According to Toups’ service record obtained by Military Times, the ex-sailor worked as a construction mechanic in the Explosive Ordnance Disposal Expeditionary Support Unit in Coronado, California. After 20 years in the sea service, he retired in 2017 as a petty officer first class, one rank below what the Justice Department documented at the time of the crimes.
Although Toups’ demotion coincided, time-wise, to the conclusion of the financial scam, it is unclear if the two are connected.
“The theft of military healthcare dollars directly harms service members and taxpayers,” prosecutor Randy Grossman said in the release. “This fraud was costly for the U.S. Navy, and now for this defendant.”
“This scheme is particularly egregious given the service members involved deceitfully served themselves for their own financial gain,” Stacey Moy, the special agent in charge of the FBI’s San Diego division, said in the press release.
To be eligible for the insurance program’s short-term financial support, service members must have suffered a traumatic injury before midnight on the day they separate from service, according to the Department of Veterans Affairs website.
At least 11 people have been charged in connection with the scheme, a previous news release from prosecutors said. Some who worked in Toups’ unit, including Ronald Olmsted and Anthony Coco, have already been sentenced to prison time and supervised release.
Olmstead admitted to swindling the insurance program out of $175,000, and giving $55,000 to Toups, by falsely reporting a rappelling accident and a fall down a flight of stairs, according to the earlier news release.
Similarly, Coco conceded that he received $100,000 from the program — and gave $65,000 to Toups — after he lied on medical reports about breaking both of his ankles following a fall from a piece of equipment.
Toups is scheduled to be sentenced on the morning of Feb. 3. In addition to paying back the stolen $2 million, he faces a maximum sentence of 20 years in prison, three years of probation and a fine of $250,000, according to the plea agreement.
Jonathan is a staff writer and editor of the Early Bird Brief newsletter for Military Times. Follow him on Twitter @lehrfeld_media