Kansas Bank CEO Admits to Embezzling Millions in Crypto Scheme, Leading to Bank’s Collapse

Bank CEO with crypto symbols and collapsing bank

The former CEO of Heartland Tri-State Bank in Kansas, Shan Hanes, has pleaded guilty to embezzling tens of millions of dollars in a cryptocurrency scheme that led to the bank’s collapse. Hanes faces up to 30 years in prison and significant fines and restitution.

Key Takeaways

  • Shan Hanes, former CEO of Heartland Tri-State Bank, admitted to embezzling millions.
  • The embezzlement was part of a cryptocurrency scheme.
  • The bank was declared insolvent and later acquired by another bank.
  • Hanes faces up to 30 years in prison, a $1 million fine, and $60.5 million in restitution.

The Embezzlement Scheme

Shan Hanes, 52, of Elkhart, Kansas, pleaded guilty in U.S. District Court to one count of embezzlement by a bank officer. The sentencing is scheduled for August 8, with a maximum penalty of 30 years in prison, a $1 million fine, and up to $60.5 million in restitution.

Hanes, who was the CEO of Heartland Tri-State Bank, admitted to embezzling bank funds and causing the bank to fail. He communicated with an unidentified co-conspirator through WhatsApp about investing in cryptocurrency. Hanes took money from multiple accounts, including from a local church, and initiated wire transfers totaling $47.1 million to a cryptocurrency wallet.

Covering His Tracks

During the embezzlement period, Hanes lied to bank employees, the board of directors, and investors about the purpose of the wire transfers. The funds were then transferred to other cryptocurrency accounts controlled by unidentified individuals. Bank shareholders lost between $9.3 million and $13.4 million.

The Collapse of Heartland Tri-State Bank

Kansas bank regulators declared Heartland Tri-State Bank insolvent in July. The Office of the State Bank Commissioner described the failure as an "isolated event." The Federal Deposit Insurance Corporation (FDIC) insured the bank’s assets, which were later acquired by a Syracuse bank.

Legal Proceedings and Admission of Guilt

Hanes was criminally charged in February. As part of a plea deal, he admitted to embezzling bank funds, causing the bank’s failure, and losing the equity of bank investors. Court documents signed by Hanes stated, "I am ‘GUILTY’" and "I hope to receive leniency, but I am prepared to accept any punishment permitted by law which the Court sees fit to impose."

The "Pig Butchering" Scam

Federal Reserve investigators revealed that Hanes fell for a "pig butchering" cryptocurrency scam. In this type of scam, fraudsters convince victims to send funds for what they believe is a legitimate investment, only to steal the money. The term "pig butchering" refers to the process of fattening up pigs before slaughter.

Impact on Victims

U.S. Attorney Kate E. Brubacher stated that many victims would never fully recoup their losses, which included life savings and retirement funds. However, she emphasized that the Department of Justice would ensure Hanes is held criminally responsible for his actions.

The collapse of Heartland Tri-State Bank followed some high-profile national bank failures, adding to the financial instability in the banking sector.

Sources

Comments

No comments yet. Why don’t you start the discussion?

Leave a Reply