According to Toups’ plea agreement, participants in the scheme stole about $2 million in payments from fraudulent claims submitted to the Traumatic Servicemembers Group Life Insurance Program (TSGLI). Toups personally siphoned about $400,000 in fraudulent claims from the program.
The TSGLI program was administered by Prudential for the Navy and funded by service members and the Department of the Navy. It provided financial assistance to service members recovering from traumatic injuries.
In his plea agreement, Toups admitted that from 2012 to at least December 2015, he conspired with his then-spouse Kelen McGrath, Navy doctor Michael Villarroel, and others to defraud money from the United States by making claims for life insurance payments based on exaggerated or entirely fictional injuries and disabilities.
“The theft of military healthcare dollars directly harms service members and taxpayers,” said US Attorney Randy Grossman. “This fraud was costly for the US Navy, and now for this defendant.”
“Fraudulently filing claims for unearned TSGLI benefits diverts compensation from deserving service members who suffered serious and debilitating injuries while on active duty,” said Rebeccalynn Staples, special agent in charge of the Western Field Office of the Department of Veterans Affairs Office of the Inspector General. “Worse yet, this defendant actively recruited others into the scheme to feed his greed for compensation he did not deserve. This guilty plea is a testament to the VA OIG’s commitment to investigating those who would defraud benefits programs administered by VA.”
According to the plea agreement, in addition to his submitting his own phony TSGLI claims, Toups encouraged numerous current and former Navy service members to submit claims of their own, sometimes telling them to provide medical records to McGrath, who was a nurse. McGrath then falsified or doctored records to exaggerate or fake injuries. Villarroel certified that he reviewed the records and determined that the service members’ daily living was impaired consistently with the claimed injuries. At times, Villarroel supported that certification by falsely stating that he had interviewed the claimant, the DOJ said. At times, Villarroel provided others’ medical records for McGrath to use in fabricating claims.
Toups admitted to the court that he encouraged recipients of claim payments to give him part of the money, calling it a “processing fee.” McGrath and Villarroel also received part of the kickback, depending on their level of involvement in the phony claim.
Two of Toups’ other co-conspirators in the scheme, Ronald Olmsted and Anthony Coco, each pleaded guilty earlier in the year. 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 DOJ alleges that Toups, MCGrath and Villarroel were at the center of the wide-ranging scam, which netted nearly $2 million.
Toups is scheduled to be sentenced on Feb. 3.