A former Kansas bank executive has been sentenced to 293 months in federal prison for embezzling $47.1 million in a cryptocurrency fraud scheme that led to the collapse of Heartland Tri-State Bank (HTSB).
Shan Hanes, 53, former chief executive of HTSB, pleaded guilty to one count of embezzlement by a bank officer.
Crypto fraud worth $47 million
Court documents revealed that Hanes executed 11 unauthorized wire transfers between May and July 2023, directing $47.1 million of the bank’s funds into a cryptocurrency wallet as part of a scheme known as “pig slaughter,” where unsuspecting investors are lured into fraudulent investments in digital assets.
Special Agent in Charge Justin R. Bundy announced Hanes’ sentence for his role in the $47.1 million embezzlement. scamwhich ultimately led to the failure of Heartland Tri-State Bank.
The Federal Deposit Insurance Corporation (FDIC), which insured HTSB at the time, absorbed the loss, while the bank’s investors took a $9 million hit as the institution collapsed under the weight of the fraud.
The FDIC confirmed that the fraudulent transfers were made to multiple cryptocurrency accounts controlled by unidentified third parties, leaving the bank unable to recover its funds.
A federal judge ordered that restitution for the victims be determined in a separate hearing within the next 90 days.
Officials condemn role of former bank CEO in bank’s downfall
U.S. Attorney Kate E. Brubacher convicted Hanes of his unbridled greed, saying he “violated his professional obligations, personal relationships, and federal law. Shan Hanes not only betrayed Heartland Bank and its investors, but his illegal schemes also jeopardized the trust in financial institutions.”
In a similar tone, FBI Special Agent in Charge Stephen Cyrus stressed that Hanes, who was trusted by the Elkhart community, exploited his position for personal gain through a scam that led to the bank’s collapse. He added that Hanes’ responsibility was to protect the bank and its customers, not to commit fraud.
Korey Brinkman, special agent in charge of FHFA-OIG’s Central Region, said Hanes’ actions constituted a serious breach of trust, causing significant losses to the bank’s customers and contributing to its downfall.
Jon Ellwanger, another special agent, added that the sentence sends a strong message that executives who jeopardize the stability of community banks will face justice.
He expressed pride in the collaboration with federal law enforcement that led to this outcome and thanked the U.S. Attorney’s Office for ensuring Hanes was held accountable for his crimes.
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