KANSAS CITY, Mo.–A former bank CEO has been sentenced to more than 24 years in prison for the embezzlement of millions of dollars as part of a “pig butchering” scheme that involved investments by the bank, which led to its failure in 2023.
Shan Hanes, 53, of Elkhart, Kan., who formerly was CEO of Heartland Tri-State Bank (HTSB), pleaded guilty to one count of embezzlement by a bank officer, according to the U.S. Attorney’s Office for the District of Kansas.
The FDIC’s Office of Inspector General said that as CEO Hanes, while head of the failed bank, initiated 11 outgoing wire transfers of the bank’s funds between May 2023 and July 2023 totaling $47.1 million. The transfers were made to a cryptocurrency wallet as part of the “pig butchering” scam, which the OIG described as a type of confidence and investment fraud in which the victim is gradually lured into making increasing monetary contributions, generally in the form of cryptocurrency, to a seemingly sound investment before the scammer disappears with the contributed funds.
How Funds Were Transferred
The OIG said that in the Heartland Tri-State Bank case the funds were transferred to multiple cryptocurrency accounts controlled by unidentified third parties during the time the bank was insured by FDIC. The FDIC took a $47.1 million loss as a result.
The failure of the bank also cost investors approximately $9 million. At the time of its failure, the bank had about $139 million in total assets and $130 million in total deposits, according to the FDIC.