tl;dr
Former CEO of defunct Kansas Heartland Tri-State Bank, Shan Hanes, has been sentenced to over 24 years in prison for embezzling over $47 million via crypto, leading to the bank's collapse. Hanes made 11 transfers to a crypto wallet involved in a pig butchering scheme, causing a total loss of equity ...
Former CEO of Kansas Heartland Tri-State Bank, Shan Hanes, has been sentenced to over 24 years in prison for embezzling over $47 million via cryptocurrency. This embezzlement ultimately led to the collapse of the bank, resulting in a complete loss of equity for investors.
Between May and July 2023, Hanes made 11 transfers of the bank's funds to a crypto wallet involved in a pig butchering scheme. His initial crypto investments in December 2022 were made with his own money, but by early 2023, further purchases were made by embezzling from a local church and an investment club.
This pig butchering scheme, a type of long-term financial fraud, involves manipulating victims into investing in fake or fraudulent schemes, often through cryptocurrency. The term is derived from the way the scam operates, drawing comparisons to a farmer fattening a pig before slaughter, as scammers typically spend weeks or even months cultivating a relationship with the victim.
The $47 million loss directly caused the collapse of the bank, with investors losing a total of $9 million. The Federal Deposit Insurance Corporation absorbed the bank's loss, but Hanes' actions have been condemned for jeopardizing confidence in financial institutions.
"Hanes' greed knew no bounds," stated U.S. Attorney Kate Brubacher. "He trespassed his professional obligations, his personal relationships, and federal law. Not only did Shan Hanes betray Heartland Bank and its investors, but his illegal schemes also jeopardized confidence in financial institutions."
Special Agent in Charge Stephen Cyrus of the FBI's Kansas City Field Office emphasized that Hanes' duty, along with the bank's, was to protect customers and identify fraudulent schemes, not to engage in them. The collapse of the bank serves as a cautionary tale, highlighting the risks associated with financial fraud in the era of cryptocurrency.
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