HARLINGEN — A Harlingen insurance broker has been sentenced to three years in federal prison for his role in a scheme to sell nonexistent windstorm policies to Valley Baptist Health System. Prosecutors said Michael N. Swetnam Jr., 47, helped to defraud VBHS out of more than $3.8 million by selling nonexistent and altered insurance policies.
He must pay VBHS nearly $3 million in restitution and forfeit a Los Fresnos home that was paid off using proceeds from the fraud, according to a statement this week by the U.S. Attorney’s Office.
Swetnam’s fraud sch- eme involved selling the hospital system both nonexistent windstorm policies and excess liability policies with premium amounts that he altered after receiving the policies from the insurer, prosecutors said. The scheme resulted in VBHS being defrauded out of approximately $3.8 million, prosecutors said.
Prosecutors alleged Swetnam met with Valley Baptist officials in Nuevo Progreso in 2006. There, prosecutor said, the insurance agent presented the hospital system with an insurance policy covering wind damage. “But the insurance never existed,” the statement said.
The indictment alleged Swetnam sent several invoices and documents pertaining to fraudulent insurance premiums through the U.S. mail.
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