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During the investigation, the authorities found that starting from May 17, 2023, Hanes initiated wire transfer transactions from Heartland Tri-State Bank to increase his crypto holdings, leveraging his position and authority as CEO.
United States prosecutors have charged Shan Hanes, the former CEO of Heartland Tri-State Bank, for allegedly embezzling millions of dollars from the bank’s customers. According to the court document filed at the US District Court of Kansas in Wichita, Hanes, who previously served as a community bank champion, testifying several times before Congress about their importance, defrauded the financial services company and its customers of $47 million to buy cryptocurrencies.
Unauthorized Wire Transfers
The former Heartland Tri-State Bank has also been accused of misappropriating funds from a local church in the district for the same purpose of acquiring digital assets.
Hanes started purchasing digital assets around December 2022. At the time, he only used his personal funds to engage in the scheme. However, he became greedy, and by early 2023, he started dipping his hands into the bank’s pocket to fund his crypto acquisition. Prosecutors claimed the digital asset purchases were funded with embezzled money from the local church and an investment club and the bank.
During the investigation, the authorities found that starting from May 17, 2023, Hanes initiated wire transfer transactions from Heartland Tri-State Bank to increase his crypto holdings, leveraging his position and authority as CEO.
The prosecutors claimed that Hanes authorized these transfers or directed employees to execute them on his behalf without the permission of the bank.
Further investigation revealed that between May 30, 2023, and at least July 7, 2023, the former bank CEO has already conducted at least 11 unauthorized wire transfers from Heartland Tri-State Bank, resulting in the embezzlement of approximately $47.1 million.
These unauthorized actions ultimately led to the downfall of Heartland Tri-State Bank. The bank was later rescued by another financial services firm, Dream First Bank, through acquisition.
Victim of a Pig Butchering Scheme
Despite the allegations against the ex-banker Hanes, Brian Mitchell, a 59-year-old local businessman and customer at the Heartland Tri-State Bank, believes that he may be a victim of a “pig butchering scheme”.
According to a Bloomberg report, Mitchell, who played a crucial role in exposing the alleged embezzlement, was suspicious when Hanes requested a loan of $12 million to withdraw funds from a crypto investment with a promise of a $1 million return.
Mitchell, whose family owns a Midwestern movie theater chain, said that Hanes mentioned that he had a contact who assisted him in crypto investments when he came for the loan. However, the contact encountered an issue with wire payments and claimed he needed more funds.
When Mitchell questioned whether these funds originated from the bank, Hanes assured him they did not, and one week later, after learning from a bank employee about Hanes’s $12 million wire transfer, Mitchell approached a member of Heartland’s board.
He told the bank’s director about his meeting with Hanes and asked if the bank might have exposure. A bank representative then went to regulators, who started investigating the matter. Mitchell described the scenario as resembling a deceptive tactic known as “pig butchering”, where scammers coerce their victims into paying more money to reclaim their assets.
