The former CEO of a Kansas bank that failed after the embezzlement of $47.1 million in a cryptocurrency scheme has been prohibited permanently from serving at another federally insured financial institution, the Federal Reserve said Thursday.
Shan Hanes, 53, of Elkhart, Kansas – and the former CEO of the failed Heartland Tri-State Bank (HTSB) in Elkhart — was prohibited by the Fed. He was sentenced in September to more than 24 years in prison after pleading guilty to one count of embezzlement by a bank officer. Hanes made the plea in late August, 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 Federal Deposit Insurance Corp.’s (FDIC) office of inspector general (OIG).
According to the OIG, 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” (a type of confidence and investment fraud), the agency said.
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.
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.