News
Kansas bank CEO embezzled millions in crypto scheme that killed the bank
The former executive of a rural Kansas bank that went bust last summer admitted to embezzling tens of millions of dollars for a cryptocurrency scheme.
Shan Hanes, 52, of Elkhart, pleaded guilty Thursday in U.S. District Court to a charge of embezzlement by a bank officer. Sentencing is scheduled for Aug. 8, with a maximum of 30 years in prison, a maximum fine of $1 million and restitution of up to $60.5 million.
Hanes previously served as CEO of Heartland Tri-State Bank in Elkhart, southwest Kansas.
“Shan Hanes is a liar and master manipulator who caused the collapse of Heartland Tri-State Bank,” U.S. Attorney Kate E. Brubacher said in a statement. “Even as he squandered tens of millions of dollars in cryptocurrencies, Hanes orchestrated plans to cover his tracks regarding the bank’s losses. Many victims will never fully recover the losses on their life savings and retirement funds, but at least We The Department of Justice can see that Hanes is held criminally responsible for his actions.”
Kansas banking regulators deemed Heartland insolvent in July. At the time, the State Bank Commissioner’s Office did not go into detail about the causes of the bank’s failure, which it called “an isolated event.” The collapse following some high-profile domestic bank failures.
The bank was insured by the Federal Deposit Insurance Corporation. The FDIC took over the bank’s assets and it was acquired by a Syracuse bank.
Hanes was criminally charged in February. As part of the plea agreement, Hanes admitted to embezzling bank funds, causing the bank to fail and losing bank investors’ capital.
The plea agreement states that Hanes communicated via WhatsApp with an unidentified co-conspirator regarding the cryptocurrency investment. Hanes withdrew money from multiple accounts, including that of a local church, and initiated a series of wire transfers totaling $47.1 million stolen from the bank and sent to a cryptocurrency wallet.
During that time Hanes lied to bank employees, the board of directors and investors about the purpose of the wire transfers. Meanwhile, the funds were then transferred to other cryptocurrency accounts controlled by other unidentified persons. The bank’s shareholders lost between $9.3 million and $13.4 million.
This was reported by Federal Reserve investigators Hanes fell for what is known as a “pig slaughter” cryptocurrency scam., where scammers steal money by convincing someone – the “pig” – to send funds for what they believe is a legitimate investment. They could also get more money by promising higher returns on continued fake investments. The term comes from the fattening of pigs before slaughter.
Court documents signed by Hanes read “I am ‘GUILTY'” and “I hope to receive leniency, but am prepared to accept any punishment permitted by law that the Court sees fit to impose.”
Jason Alatidd is a Statehouse reporter for The Topeka Capital-Journal. He can be reached via email at jalatidd@gannett.com. Follow him on X @Jason_Alatidd.