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June 23, 2009

TWO INSURANCE AGENTS CHARGED WITH MULTI-MILLION DOLLAR INSURANCE FRAUD SCHEME

(HOUSTON) - A 10-count indictment has been unsealed, charging Brent A. Carter and Michael N. Swetnam Jr., with conspiracy, mail fraud and wire fraud, United States Attorney Tim Johnson announced today. Carter and Swetnam are both licensed insurance brokers with offices in the Brownsville, Texas area.
 
Carter, 46, of Harlingen, Texas, and Swetnam, 54, of Los Fresnos, Texas, are charged for their alleged involvement 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.

According to allegations in the indictment, Carter and Swetnam overcharged the hospital on two surplus policies that were purchased from Zurich in New York. After purchasing the policies, the indictment alleges, Carter and Swetnam altered the documents to misrepresent the premium owed by the hospital. The fraudulent premium enabled Carter and Swetnam to make a 100% profit on the sale of the two policies, in addition to their standard 10% commission, for a profit of more than $2 million.

Swetnam and Carter are also charged with selling the hospital two non-existent policies for hurricane coverage for two hurricane seasons from 2006-2008. For one policy, Carter and Swetnam allegedly arranged a meeting in Mexico where hospital administrators traveled to meet with them to discuss the purchase of hurricane coverage. During this meeting in 2006, Carter and Swetnam allegedly provided Valley Baptist three insurance Cover Notes for non-existent insurance companies upon which the signature of a British Virgin Islands insurance manager had been forged. For the hurricane policy on the following year, Swetnam and Carter simply told Valley Baptist representatives they could obtain their hurricane/windstorm coverage “cheaper” than the year before, according to the indictment. Again, Swetnam and Carter provided Valley Baptist with an insurance confirmation for a totally non-existent insurance company, in which the signature of the insurance manager had been forged. Carter and Swetman made approximately $2 million off of the sale of these fraudulent policies. 

The Indictment also provides notice to each defendant of the intent of the United States to forfeit their interest in the ill gotten gains they allegedly obtained from the insurance fraud scheme.    

The maximum penalty, upon conviction, for mail and wire fraud is 20 years in prison and a $250,000 fine. The conspiracy charge carries a maximum term of imprisonment of five years imprisonment and $250,000 fine.

Both defendants are expected to make their initial appearance before a magistrate judge later this week. Swetnam is expected to appear before U.S. Magistrate Judge Stephen Smith on Wednesday, June 24 at 2:00 p.m., while Carter is expected to appear before U.S. Magistrate Judge Frances Stacy the following day, at 2:00 p.m.

This case was investigated by the United States Postal Inspection Service with the assistance of the Texas Department of Insurance and is being prosecuted by Assistant United States Attorneys Ryan D. McConnell and Jay Hileman with the assistance of Assistant United States Attorney Kristine Rollinson in the Asset Forfeiture Section.

 

 

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