5 indicted in Navy insurance fraud scheme

May 03--Five Navy service members who were stationed in San Diego fraudulently claimed $100,000 insurance payouts for non-existent injuries, according to a federal indictment unsealed Wednesday.

The indictment filed in U.S. District Court in San Diego alleges that the four men and one woman fabricated their insurance claim applications with forged signatures and altered hospital records belonging to other real patients.

The defendants pretended to have injured themselves in a variety of falls -- including from a horse -- or motorcycle crashes, the indictment says.

Four of them got their $100,000 before the government discovered the scheme and froze final payments, according to the U.S. Attorney's Office.

Those indicted were Richard Cote, 43, of Oceanside, Earnest Thompson, 44, of Murrieta, brothers Christopher Toups, 40, of Woodstock, Ga. and Jason Toups, 35, of Gulfport, Miss. and Christopher Toups' ex-wife, Kelene McGrath, 41, also known as Jacqueline Toups, of Jacksonville, Fla.

They are charged with wire fraud and conspiracy to commit wire fraud, each of which carries a 20-year maximum prison sentence. They also are charged with making a fraudulent claim, which carries a maximum five-year prison term, prosecutors said.

Christopher Toups was expected to appear for arraignment in Georgia. The others were arraigned Wednesday before U.S. Magistrate Judge Ruben Brooks in San Diego.

They have pleaded not guilty.

An attorney for Cote did not immediately return a call and email seeking comment.

The indictment alleges the defendants filed bogus claims through Traumatic Servicemembers Group Life Insurance, a program funded by the Department of Defense and service members.

The plan is meant to provide short-term financial aid, of up to $100,000, to severely injured service members and veterans.

Cote was a chief petty officer and a member of Explosive Ordnance Disposal Expeditionary Support Unit One as of last December. According to the indictment, he filled out a claim in 2015 saying he had suffered traumatic injuries in 2002 by falling off a ladder while taking down Christmas lights. He allegedly altered the real medical record of a Navy man who fell from a helicopter during training.

Thompson was an officer until 2015, after serving four years in the same unit as Cote. He is alleged to have filed a claim in 2013 saying he broke his leg, foot, knee and forearm in a 2002 motorcycle accident.

Christopher Toups, was a chief petty officer construction mechanic in the explosive disposal unit from 2010 to 2014. In 2012, he is alleged to have claimed major injuries from a fall during training in 2005.

McGrath was an officer and a nurse until 2012. That year, the indictment says, she claimed a shoulder injury from a 2002 fall from a horse.

Jason Toups, a petty officer 2nd class, filed a claim in 2013 for a purported motorcycle crash that caused numerous fractures and a concussion in 2004.

Only Cote failed to receive full payment on the insurance claim, according to the indictment.

The indictment, San Diego U.S. Attorney Adam Braverman said in a statement, "sends a message to those who seek to defraud the government out of the dollars meant to care for our seriously injured military members that they will be held accountable."

pauline.repard@sduniontribune

Twitter: @pdrepard

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