Ex-Kansas Banker Charged for Embezzling Millions Via Crypto Scheme

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Sujha Sundararajan

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Sujha Sundararajan

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Last updated:

August 20, 2024 03:07 EDT

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Ex-CEO of the now-defunct Kansas-based Heartland Tri-State Bank, has been charged for his alleged involvement in a fraud crypto scheme.

Shan Hanes, of Elkhart pleaded guilty to one count of embezzlement, involving tens of millions of dollars in crypto. Apparently, the fraud scheme led the bank to fail at a complete loss of equity to investors, the announcement read.

The U.S. Attorney’s Office at District of Kansas has sentenced Hanes to 24 years in prison for using his former position to commit the fraud.

Per the court documents, the crypto scheme is referred to as “pig butchering.” It involved Hanes creating 11 outgoing wire transfers of Heartland’s funds between May 2023 and July 2023, totaling $47.1 million.

The funds were sent to multiple crypto wallets controlled by unidentified third parties, it added. Further, Hanes’ attempt to benefit financially by embezzling funds from the bank, led to the collapse of Heartland with $9 million loss to investors.

U.S. Attorney Kate E. Brubacher noted that the sentence is a “measure of justice for the victims.” She also stressed that the ruling proves U.S. Department of Justice “will hold those accountable and violate positions of trust for their own gain.”

“Not only did Shan Hanes betray Heartland Bank and its investors, but his illegal schemes also jeopardized confidence in financial institutions.”

Additionally, Korey Brinkman, special-agent-in-charge of FHFA-OIG’s Central Region, assured his agency would continue to “vigorously investigate criminal offenses involving frauds.”

Pig-Butchering Crypto Scheme on the Rise

According to INTERPOL’s Global Financial Fraud assessment released early this year, pig-butchering crypto schemes have been predominantly on the rise.

Additionally, losses from investment scams increased to a new-high of 38% last year, FBI’s Internet Crime report revealed. Some estimates noted that pig butchering scams have netted a whopping $75 billion from the start of 2020 to February of this year.