Kansas Bank CEO Sentenced to 24 Years for $47 Million Crypto Scam That Led to Bank’s Collapse
In a shocking tale of greed, deception, and financial ruin, former Kansas bank CEO Shan Hanes has been sentenced to over 24 years in federal prison for embezzling $47 million from Heartland Tri-State Bank in Elkhart. This massive theft was funneled into cryptocurrency wallets controlled by scammers in a “pig butchering” scheme, a type of fraud where victims are manipulated into making significant financial investments, only to lose everything.
Hanes’ criminal actions led to the bank’s collapse, one of only five U.S. banks to fail in 2023, and the subsequent takeover by the Federal Deposit Insurance Corporation (FDIC). The repercussions were devastating for the small community of Elkhart, Kansas, where the bank was located. Many residents lost significant portions of their retirement savings, with one woman now unable to afford nursing home care for her elderly mother and another facing the grim reality of delayed retirement.
The Scam that Destroyed a Community
The scheme that entrapped Hanes, often referred to as “pig butchering,” involves scammers convincing victims to invest in what appear to be legitimate cryptocurrency opportunities. The fraudsters then gradually escalate the demands for additional funds under the guise of securing or unlocking previous investments, ultimately leading to the victim’s financial ruin.
Hanes, who had been the CEO of Heartland Tri-State Bank, began his involvement in December 2022 after being contacted by an unidentified individual through WhatsApp. The former banker initially used his personal funds to purchase cryptocurrency but quickly resorted to stealing from the bank and other local entities, including a church and an investment club, to continue feeding the scam. His thefts included $40,000 from Elkhart Church of Christ, $10,000 from the Santa Fe Investment Club, $60,000 from his daughter’s college fund, and nearly $1 million in stock.
A Rapid Downfall
In a mere eight weeks, Hanes wired a total of $47 million to the scammers. His downfall began with a series of increasingly large wire transfers, including $6.7 million in a single transaction and $10 million less than two weeks later. Heartland Tri-State Bank employees, likely intimidated by Hanes’ dominant role and respected status in the community, failed to question these suspicious transfers, despite the bank’s own policies.
The bank’s collapse on July 28, 2023, led to a complete wipeout of shareholder value, though depositors were spared financial loss thanks to Dream First Bank’s assumption of all deposits. Heartland Tri-State Bank had nearly $140 million in assets and $130 million in deposits at the time of its closure.
A Community Betrayed
Brian Mitchell, a long-time neighbor of Hanes and one of the many affected by the bank’s failure, described the former CEO’s actions as “pure evil.” Despite pleas for assistance, including a bizarre request from Hanes to borrow $12 million to supposedly “verify” his cryptocurrency holdings, Mitchell and others in the community were powerless to stop the unfolding disaster.
During his sentencing, Hanes displayed little remorse, offering only a brief apology without eye contact. The presiding judge, John Broomes, sentenced him to 293 months in prison, 29 months more than prosecutors had requested. Judge Broomes acknowledged the deep betrayal felt by the community, urging them to forgive Hanes and move forward, while also noting that Hanes’ intelligence should have prevented such a catastrophic series of decisions.
The Aftermath
Hanes’ attorney, John Stang, described his client as a victim of the sophisticated scam, but Kansas U.S. Attorney Kate Brubacher highlighted Hanes’ unchecked greed as the driving force behind the crime. Brubacher emphasized that Hanes’ actions not only destroyed a bank and its investors but also undermined public confidence in financial institutions.
As Hanes begins his lengthy prison sentence, the small town of Elkhart is left to pick up the pieces, forever altered by a crime that began with a promise of wealth and ended in ruin.
