The former CEO of Heartland Tri-State Bank in Elkhart has pleaded guilty to embezzling $47 million in bank funds to funnel into a cryptocurrency scam. Shan Hanes, the former bank executive, could face up to 30 years in prison, a $1 million fine, and be required to pay up to $60.5 million in restitution.
Hanes fell victim to what cybersecurity experts call a “pig butchering” scheme. In this type of scam, the victim is lured into investing in a specific cryptocurrency with promises of high returns. The scammer gradually solicits more money over time, likened to fattening a pig before slaughter, before ultimately stealing the funds and cutting ties.
The Federal Bureau of Investigations stated that this form of online scamming originated in China in 2019 but has since spread throughout Southeast Asia.
Hanes was contacted by an unidentified scammer through WhatsApp about investing in cryptocurrency. He then made 11 wire transfers from the bank into his digital cryptocurrency wallet on the exchange website Kraken. Hanes lied to bank employees, the board of directors, and investors about the transfers, ultimately causing shareholders to lose between $9 million and $13 million.
The U.S. Attorney’s Office charged Hanes in February, and he signed a plea deal admitting his guilt in May.
Following the scandal, the Kansas Office of the State Bank Commissioner announced that Heartland Tri-State Bank was insolvent in July 2023. The Federal Deposit Insurance Corporation assumed the bank’s assets, and insured customers were able to access their funds despite the closure. Dream First Bank in Syracuse, Kansas, acquired Heartland Tri-State and took over its operations, with former customers’ accounts transitioning to the new system.