Shan Hanes, has been sentenced to over 24 years in federal prison for orchestrating a $47 million cryptocurrency fraud scheme that led to the collapse of the bank.
Hanes, who served as the Chief Executive Officer of the now-defunct bank, received a 293-month sentence after pleading guilty to embezzlement and wire fraud charges.
The sentence, announced by the U.S. Attorney’s Office in Kansas on August 19, 2024, follows a year-long investigation into Hanes’ illegal activities.
From May to July 2023, Hanes carried out a series of illicit wire transfers totaling over $47 million from Heartland Tri-State Bank’s accounts to a personal cryptocurrency wallet.
His actions devastated the bank’s finances, ultimately causing its failure and leaving customers, investors, and the community in turmoil.
The scheme, identified as a “pig butchering” scam—a long-term fraud in which victims are manipulated into funneling increasing amounts of money into a fraudulent investment, often cryptocurrency—was executed under Hanes’ leadership.
Hanes, who was entrusted with the bank’s operations and customer assets, instead betrayed that trust for personal financial gain.
“Hanes’ greed knew no bounds,” said U.S. Attorney Kate E. Brubacher in a statement. “Not only did Shan Hanes betray Heartland Bank and its investors, but his illegal schemes also jeopardized confidence in financial institutions. Today’s sentence is a measure of justice for the victims and a statement that the U.S. Department of Justice will hold those accountable who violate positions of trust for their own gain.”
Heartland Tri-State Bank, located in Elkhart, Kansas, was insured by the Federal Deposit Insurance Corporation (FDIC), which absorbed the $47.1 million loss caused by Hanes’ fraudulent activities.
The bank’s collapse also inflicted a $9 million loss on its investors, further deepening the financial damage to the community.
The case shocked many in the financial world, not only because of the scale of the fraud but also because Hanes held a position of significant responsibility.
He was trusted to protect his customers’ assets and ensure the bank’s integrity, but instead exploited his position for a get-rich-quick scheme.
“Mr. Hanes, as the CEO of Heartland Tri-State Bank, held the trust and confidence of the community of Elkhart, KS, but he violated that trust,” said Stephen Cyrus, Special Agent in Charge of the FBI Kansas City Field Office.
“His idea to get rich quickly, in all reality, was a pig butchering scheme. His involvement in this scheme ultimately led to the bank’s collapse. His job was to protect its customers and identify fraudulent scams — not to participate in them.”
The pig butchering scam, also known as “Sha Zhu Pan” or “Killing Pig Plate,” is a particularly insidious form of fraud that gradually entices victims to invest increasing amounts of money into fraudulent cryptocurrency schemes.
Hanes’ involvement in such a scheme, particularly given his status as a banking CEO, has sent shockwaves throughout the industry and raised questions about oversight and fraud prevention in financial institutions.
Heartland Tri-State Bank’s collapse has had widespread implications. The loss of jobs, investments, and community trust has been profound, with many calling for stricter regulations to prevent such abuses of power.
As part of his sentence, Hanes will also face restitution hearings, where he is expected to be ordered to pay back a portion of the stolen funds.
However, recovering the full amount is unlikely, leaving a lasting impact on the bank’s former customers and investors.
The case has also prompted the FDIC to review its regulatory procedures, particularly in the oversight of small and mid-sized banks, to prevent future incidents of embezzlement and fraud.
Financial experts have pointed out that Hanes’ actions have further eroded public trust in traditional banking institutions at a time when the rise of fintech and cryptocurrencies has already posed significant challenges to the sector.
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