WICHITA, KS - The Federal Bureau of Investigation (FBI) has recovered over $8 million in embezzled funds by a bank CEO, leaving dozens of people crying tears of relief.
According to Fortune, in August, former Kansas bank CEO Shan Hanes was sentenced to 24 years after reportedly stealing $47 million from customer accounts and wiring the money to cryptocurrency accounts run by scammers. Prosecutors also said that Hanes stole $40,000 from his church, $10,000 from an investment club, and $60,000 from his daughter's college fund, all while losing $1.1 million of his own money in the scheme.
Hanes' Heartland Tri-State Bank, drained of cash, was shut down by federal regulators and sold to another financial institution. Customers' savings and checking accounts amounting to $47.1 million were insured by the Federal Deposit Insurance Corp., which paid off their losses.
However, there were still 30 shareholders of the community-owned rural bank Hanes helped found, including his close family, friends, and neighbors who thought they lost $8.3 million in investments. Those investments included well-planned retirements, long-term eldercare, education funds, and bequests for children and grandchildren were all zeroed out.
On Monday, November 4th, those shareholders stood to cheer federal Judge John W. Broomers in Wichita after he told them, one at a time, that they would be paid back in full as the FBI had recovered the funds from a cryptocurrency account held by Tether Ltd. in the Cayman Islands.
One of the shareholders, Bart Camilli, 70, said, "I just can't describe the weight lifted off of us. It's life-changing." Bart and his wife, Cleo, had learned that they'd recover close to $450,000, money he began saving at 18 when he bought his first individual retirement account. During an earlier sentencing hearing, the victims called Hanes a "deceitful cheat and a lair," and "pure evil."
Margaret Grice came to court figuring she would get $1,000 back. Instead, she learned she would be recovering almost $250,000, which was her entire 401(k). She said, "I am just really thrilled. I can breathe."
Prosecutors said Hanes, who was the CEO of Heartland Tri-State Bank in Elkhart, Kansas, lost the money in a scam referred to as "pig butchering," or the way pigs are fattened before slaughter. In the scam, a third party gains a victims' trust and, over time, convinces them to invest all of the money into cryptocurrency, which immediately disappears.
Officials in the U.S. and U.N. said that these schemes are proliferating, with scammers largely in Southeast Asia increasingly taking advantage of Americans. Hanes started buying what he thought was $5,000 in cryptocurrency in late 2022, communicating with someone who had reached out on WhatsApp.
A few months later, he transferred over his church and investment club funds. Records show that the scam accelerated in the summer of 2023, when Hanes wired $47.1 million out of customer accounts in 11 wire transfers over a span of eight weeks. He watched, on a fake website, as the money appeared to grow to more than $200 million.
His attorney, John Stang said, "He was to take some of the money and the rest of the money was supposed to go back to the bank. Now it's fiction, it didn't exist. We all know that now. It failed big time."
Hanes apologized at an earlier sentencing hearing. He said, "From the deepest depth of my soul, I had no intention of ever causing the harm that I did. I'll forever struggle to understand how I was duped and how what I thought was just getting the money back was making it worse." Prosecutors said Hanes was not just the victim of a scam as he crossed a line when he began taking customers' money and violating banking regulations.
In May, he pleaded guilty to embezzlement by a bank officer. Hanes, who is 53, will likely be in his late 70s when he is released from prison and is unlikely able to pay the FDIC the $47.1 million still owed. His attorney said, "Mr. Hanes made some very bad choices after being caught up in an extremely well-run cryptocurrency scam. He was the pig that was butchered."
