A former Kansas bank executive has been sentenced to 293 months in federal prison for embezzling $47.1 million in a cryptocurrency fraud that led to the collapse of Heartland Tri-State Bank (HTSB).
Shan Hanes, 53, former CEO of HTSB, pleaded guilty to one count of embezzlement by a bank officer.
$47 Million Crypto Fraud
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 scheme known as “pig skinning,” where unsuspecting investors are lured into fraudulent digital asset investments.
Special Agent in Charge Justin R. Bundy announced Hanes’ sentencing for his role in the $47.1 million embezzlement scam that ultimately led to the failure of Heartland Tri-State Bank.
The Federal Deposit Insurance Corporation (FDIC), which insured HTSB at the time, absorbed the loss, while the bank’s investors took a $9 million hit when the institution collapsed under the weight of the fraud.
The FDIC confirmed that the fraudulent transfers were made to multiple cryptocurrency accounts controlled by unidentified third parties, leaving the bank unable to recover its funds.
A federal judge ordered that restitution to victims be determined at a separate hearing within the next 90 days.
Authorities condemn former bank CEO’s role in bank’s collapse
U.S. Attorney Kate E. Brubacher sentenced Shan Hanes for his unbridled greed, saying he “transgressed his professional obligations, his personal relationships, and federal law. Shan Hanes not only betrayed Heartland Bank and its investors, but his illegal schemes also jeopardized trust in financial institutions.”
In a similar tone, FBI Special Agent Stephen Cyrus stressed that Hanes, who had the trust of the Elkhart community, had exploited his position for personal gain by organizing a fraud that led to the bank’s failure. He added that Hanes’ responsibility was to protect the bank and its customers, not to commit fraud.
Korey Brinkman, Special Agent in Charge of the FHFA-OIG Central Region, noted that Hanes’ actions constituted a serious breach of trust, resulting in significant losses for the bank’s customers and contributing to its downfall.
Jon Ellwanger, another special agent, added that the conviction sends a strong message: executives who undermine the stability of community banks will be brought to justice.
He said he was proud of the collaboration with federal law enforcement that led to this outcome and thanked the U.S. Attorney’s Office for ensuring Hanes was held accountable for his crimes.
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