Dozens of people whose life savings were embezzled by a bank CEO in Kansas have been relieved as federal law enforcement recovered their stolen funds. The scam, referred to as ‘pig butchering,’ involved convincing victims to invest all their money into cryptocurrency, which would then disappear.
Background
A federal courtroom in Kansas witnessed a scene of relief on Monday as dozens of people whose life savings had been embezzled by a bank CEO learned that federal law enforcement had recovered their money.
The Scam
The scam, referred to as “pig butchering,” involved a third party gaining the trust of victims and convincing them to invest all of their money into cryptocurrency, which would then disappear. Hanes started buying what he thought was $5,000 in cryptocurrency in late 2022, communicating with someone who had reached out on WhatsApp.
The Scammer’s Downfall
Hanes wired $47.1 million out of customer accounts in 11 wire transfers over just eight weeks, believing each transfer would end the investment and allow him to cash out. However, he was actually perpetuating the scam, watching as the money appeared to grow to more than $200 million on a fake website.
The Investigation
A Federal Reserve System investigation found that Hanes had been on the school board, volunteered as a swim meet official, and served on the Kansas Bankers Association. He also testified before Congressional committees about the importance of local banks in farming communities and served as a director for the American Bankers Association.
Courtroom of Relief
On November 4, 2024, a federal courtroom in Kansas witnessed a moment of relief for dozens of people whose life savings had been embezzled by the CEO of Heartland Tri-State Bank. The court heard that federal law enforcement had recovered the stolen funds.
Investigation and Recovery
The investigation revealed that the bank’s CEO, Shan Hanes, had lost $47 million from customer accounts to a cryptocurrency scam referred to as “pig butchering.” Hanes had wired the money to cryptocurrency accounts run by scammers, thinking it was necessary to end the investment and cash out. The scheme accelerated in the summer of 2023, with Hanes transferring over $47.1 million in 11 wire transfers over eight weeks.
Sentencing and Apology
In August, Shan Hanes was sentenced to 24 years for stealing $47 million from customer accounts and wiring it to cryptocurrency accounts run by scammers. Hanes also stole money from his church, investment club, and daughter’s college fund and lost $1.1 million of his own in the scheme.
Recovery of Funds
The FBI recovered the stolen funds, bringing relief to the victims. The Federal Deposit Insurance Corp. (FDIC) had paid off their losses after Hanes’ bank was shut down by federal regulators.
Key Takeaways
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Shan Hanes, former CEO of Heartland Tri-State Bank, was sentenced to 24 years for stealing $47 million from customer accounts.
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Hanes lost the money in a cryptocurrency scam referred to as “pig butchering.”
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The Federal Deposit Insurance Corp. (FDIC) had paid off their losses after Hanes’ bank was shut down by federal regulators.
Sources
The Recovery
Prosecutors said the FDIC wanted to be paid back for the insurance claims it reimbursed to bank customers. However, Judge Broomes decided that paying the economic circumstances of shareholders who became insolvent due to the fraud scheme first was justified before the FDIC recovers anything.
Hanes’ Apology and Plea
Hanes apologized at an earlier sentencing hearing, stating he had no intention of causing harm and would forever struggle to understand how he was duped. Prosecutors said Hanes wasn’t just a victim of a scam but crossed a line when he began taking customers’ money and violating banking regulations.
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The scam, “pig butchering,” involved convincing victims to invest all their money into cryptocurrency, which would then disappear.
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Hanes wired $47.1 million out of customer accounts, believing each transfer would end the investment and allow him to cash out.
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A Federal Reserve System investigation found that Hanes had been on the school board, volunteered as a swim meet official, and served on the Kansas Bankers Association.
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Judge Broomes decided to pay shareholders who became insolvent due to the fraud scheme first before the FDIC recovers anything.
