More than 24 years in prison were given to a former Kansas bank CEO for his part in embezzling millions through a cryptocurrency scheme at his former institution, which eventually failed last year, the federal bank deposit insurance agency said Wednesday.
The inspector general for the Federal Deposit Insurance Corp. (FDIC) said Shan Hanes, 53, of Elkhart, Kansas – and the former CEO of the failed Heartland Tri-State Bank (HTSB) in Elkhart — pleaded guilty to one count of embezzlement by a bank officer. Hanes made the plea late last month, according to the U.S. Attorney’s Office for the District of Kansas. He was sentenced to 293 months in federal prison, according to the FDIC’s OIG.
The OIG said Hanes, while head of the failed bank, initiated 11 outgoing wire transfers between May 2023 and July 2023 totaling $47.1 million of Heartland’s funds. The transfers were made to a cryptocurrency wallet in a scheme referred to as “pig butchering,” the agency said.
The OIG has described “pig butchering” as a type of confidence and investment fraud in which the victim is gradually lured into making increasing monetary contributions, generally in the form of cryptocurrency, to a seemingly sound investment before the scammer disappears with the contributed monies.
In the Heartland case, the OIG said, the funds were transferred to multiple cryptocurrency accounts controlled by unidentified third parties during the time the bank was insured by FDIC. The FDIC absorbed a $47.1 million loss, the agency said.
It asserted that Hanes’ fraudulent actions caused the bank to fail and its investors to lose $9 million.
A federal judge ordered that restitution be finalized at a separate hearing within the next 90 days.
Heartland, a state-chartered, FDIC-insured bank, was closed by the Kansas state financial institutions supervisor in July 2023. At the time, it had about $139 million in total assets and $130 million in total deposits, the FDIC said. The bank’s four branches reopened shortly after that as branches of Dream First Bank, which assumed all deposits of Heartland under agreement with the FDIC.
Former CEO of failed bank sentenced to prison
Leave a Reply