Cryptocurrency Fraud Scheme Leads to Collapse of Heartland Tri-State Bank

Recently, a former Kansas bank executive, Shan Hanes, was sentenced to 293 months in federal prison for embezzling $47.1 million in a cryptocurrency fraud scheme. Hanes, the former CEO of Heartland Tri-State Bank (HTSB), pleaded guilty to one count of embezzlement by a bank officer. Shockingly, court documents revealed that Hanes executed 11 unauthorized wire transfers between May and July 2023, directing $47.1 million of the bank’s funds to a cryptocurrency wallet as part of a fraudulent scheme known as “pig butchering.”

The consequence of Hanes’s actions led to the collapse of Heartland Tri-State Bank, leaving the Federal Deposit Insurance Corporation (FDIC) to absorb the $47.1 million loss. Additionally, the bank’s investors suffered a $9 million hit as the institution failed under the weight of the fraud. The FDIC confirmed that the fraudulent transfers were made to multiple cryptocurrency accounts controlled by unidentified third parties, making it impossible for the bank to recover its funds.

U.S. Attorney Kate E. Brubacher condemned Hanes for his actions, stating that his “limitless greed” trespassed his professional obligations, personal relationships, and federal law. FBI Special Agent in Charge Stephen Cyrus also emphasized how Hanes exploited his position of trust within the Elkhart community for personal gain, leading to the bank’s collapse. Korey Brinkman, Special Agent-in-Charge of FHFA-OIG’s Central Region, highlighted that Hanes’s actions breached trust, causing significant losses to bank customers and contributing to its downfall.

The sentencing of Shan Hanes sends a strong message that executives who compromise the stability of community banks will face justice. Special Agent Jon Ellwanger expressed pride in the collaboration with federal law enforcement that led to this outcome. The U.S. Attorney’s Office ensured that Hanes was held accountable for his crimes, highlighting the importance of upholding integrity and trust within financial institutions.

Crypto

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