A former CEO of the defunct Kansas Heartland Tri-State Bank has been sentenced to more than 24 years in prison for embezzling funds via crypto and ultimately sinking the bank.
The actions of Shan Hanes subsequently led the bank to fail at a “complete loss of equity for investors,” according to a Monday statement from the U.S. Attorney’s Office for the District of Kansas.
Between May and July 2023, Hanes used his position as CEO to make 11 transfers of the bank’s funds, worth over $47 million, to a crypto wallet involved in a pig butchering scheme.
Hanes pleaded guilty to one count of embezzlement by a bank officer on May 23, which typically carries a maximum sentence of 30 years.
‘Pig Butchering’ Crypto Romance Scams Up 85 Times Since 2020
Crypto activity linked to “pig butchering” romance scams is 85 times higher than it was in 2020, with revenue doubling from 2022 to 2023, according to a new report from Chainalysis. Romance scams grew over this period even as the total value sent to scams fell, the report found. Ponzi schemes in particular fell in volume, which the report’s authors linked to the 2023 bear market and high-profile investigations deterring the public. Pig butchering scams involve the use of social engineering to bu...
Court documents filed earlier this year indicate that Hanes’ initial investments into crypto in December 2022 were made with his own money. However, by early 2023, further purchases were made by embezzling from a local church and investment club.
A pig butchering scam is a type of long-term financial fraud that involves manipulating victims into investing in fake or fraudulent schemes, often through cryptocurrency.
The term is derived from the way the scam operates, drawing comparisons to a farmer fattening a pig before slaughter; scammers typically spend weeks or even months cultivating a relationship with the victim.
The $47 million loss directly caused the collapse of the bank and its eventual closure, the court filing notes.
At the time, the bank was insured by the Federal Deposit Insurance Corporation, which absorbed the loss. However, investors lost a total of $9 million from the fallout.
“Hanes’ greed knew no bounds,” U.S. Attorney Kate Brubacher said in the statement. “He trespassed his professional obligations, his personal relationships, and federal law. Not only did Shan Hanes betray Heartland Bank and its investors, but his illegal schemes also jeopardized confidence in financial institutions.”
Do Meme Coin Traders Care About Getting Scammed? Psychologists Explain
It feels like a daily occurrence that someone gets rug pulled investing in a silly meme coin. More often than not, the investor laughs it off and moves onto the next Pump.fun token. It makes you question, though: Do crypto degens even care about being scammed? Logically, people don’t invest money if they think they’re going to lose money on a meme coin—no matter how degenerate you are. But, once it becomes apparent that the project is a scam, and the rug has been pulled from beneath them, the in...
Hanes' plan to quickly amass wealth was, in reality, a pig butchering scheme, which ultimately caused the bank's collapse, special agent in charge Stephen Cyrus of the FBI's Kansas City Field Office said in the statement.
Cyrus said that Hanes' responsibility, along with the bank's, was to protect customers and identify fraudulent schemes, not to engage in them.
Edited by Sebastian Sinclair
