Rio Grande Valley Insurance Broker Sentenced to Prison

A 47-year-old Harlingen man was sentenced to more than three years in federal prison for a scheme to defraud a Rio Grande Valley hospital of more than $3.8 million by selling it nonexistent and altered insurance policies.

Judge Keith P. Ellison on sentenced Michael N. Swetnam Jr. to three years’ supervised release and ordered him to pay $2.95 million in restitution to Valley Baptist Hospital. A jury found Swetnam guilty of three counts of mail fraud in May.

Officials said Swetnam, a licensed insurance broker in the Brownsville area, sold the hospital both nonexistent windstorm policies and excess liability policies with premium amounts Swetnam altered after receiving the policies from the insurer.

Swetnam was one of two licensed insurance brokers with offices in the Brownsville, Texas, area that were charged in June 2009 with conspiracy, mail fraud and wire fraud in a multi-million dollar scheme, according to the U.S. Attorney’s Office for the Southern District of Texas.

A 10-count indictment unsealed June 23, 2009, alleged that Swetnam, of Los Fresnos, Texas, and another man who has since been acquitted of the charges, were involved in a scheme to defraud Valley Baptist Hospital in South Texas out of approximately $4 million dollars in connection with the sale of surplus lines of insurance and insurance for hurricanes from 2006-2008.

Valley Baptist is the largest provider of medical services in South Texas and includes a retirement community, a fitness center, a medical equipment distributor, a managed care health plan provider and a network of health care facilities offering specialty service such as home health and hospice care, dialysis and rehabilitation.

Topics Texas Agencies