Former Kansas Banker Charged with Embezzling Millions in Crypto Fraud Scheme

The former CEO of the now-closed Heartland Tri-State Bank, based in Kansas, has been charged for his role in a fraudulent crypto scheme.

Shan Hanes, from Elkhart, pleaded guilty to a single count of embezzlement involving millions of dollars in cryptocurrency. This fraudulent activity contributed to the bank’s collapse, resulting in a complete loss for investors. The U.S. Attorney’s Office for the District of Kansas sentenced Hanes to 24 years in prison for exploiting his position to carry out the fraud.

Court documents describe the scheme as a “pig butchering” operation. Between May 2023 and July 2023, Hanes made 11 wire transfers from Heartland’s accounts, totaling $47.1 million, to various crypto wallets controlled by unknown parties. His actions not only led to the bank’s failure but also caused a $9 million loss for investors.

U.S. Attorney Kate E. Brubacher stated that the sentence serves as a form of justice for the victims and demonstrates that the U.S. Department of Justice will hold those who abuse their positions of trust accountable. She emphasized that Hanes not only betrayed Heartland Bank and its investors but also undermined confidence in financial institutions.

Additionally, Korey Brinkman, Special Agent-in-Charge of the Central Region for FHFA-OIG, assured that his agency will continue to aggressively investigate fraud-related crimes.

“Pig butchering” crypto schemes are becoming more common, according to INTERPOL’s Global Financial Fraud assessment. The FBI’s Internet Crime Report revealed that losses from investment scams reached a new high, increasing by 38% last year. Some estimates suggest that “pig butchering” scams have resulted in $75 billion in losses since the beginning of 2020.