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The former CEO of a small Kansas bank has been sentenced to more than 24 years in prison for stealing as much as $47 million from a bank he never profited from, court documents show.
Federal prosecutors say former Heartland Tri-State Bank CEO Shan Hanes was tricked by scammers who convinced him to wire millions of dollars with the promise of unlocking returns on cryptocurrency investments.
The 53-year-old executive orchestrated a series of wire transactions over eight years that led to the collapse of Elkhart Bank and resulted in a takeover by the Federal Deposit Insurance Corporation (FDIC), making it one of five U.S. banks to fail by 2023. According to CNBC.
According to one resident of the small town of 2,000 in southwestern Kansas, Hanes seemed like a “nice guy.”
Hanes helps his fellow men in the community. He preaches at the local church.
He is also an active member of the banking industry, having served on the boards of the American Bankers Association and the Kansas Bankers Association and testified before Congress on community banking.
But court records show Hanes had been embezzling funds from the church, a local investment club and the college savings account of one of his three daughters — all of which were taken by scammers.
On Monday, U.S. District Judge John Broomes sentenced Hanes to 24 years in prison, 29 months more than prosecutors had requested, after he pleaded guilty in May to a charge of embezzlement by a bank official.
A community member told CNBC that despite Hanes shutting down the bank he led and draining shareholders of their savings, he showed no remorse during the hearing.
Brian Mitchell, a longtime neighbor of Hanes, called the former CEO’s actions “pure evil” during the sentencing.
Mitchell, whose farm and movie chain banked with Heartland Bank, told CNBC that about 30 bank shareholders attended Hanes’ sentencing after the bank’s collapse caused their stock values to plummet.
He told CNBC that some residents have “lost 70% to 80% of their retirement funds.”
He said a local woman “is struggling to afford nursing home care for her 93-year-old mother,” while another can’t afford to retire.
Although Mitchell himself was not a shareholder in the bank, he had been a member of the investment club that Hanis stole from.
Mitchell said that in court, “Shan faced the judge, and the judge simply glanced back over his left shoulder, made no eye contact with Shan, and simply said, ‘I’m sorry.'”
But Mitchell said Hannes did look “very shocked” when Brooms announced his 24-year sentence and ordered his immediate detention.
Prosecutors said Hanes first used his own funds in late 2022 to become the “pig” in a “pig-killing scheme” carried out by scammers who persuaded victims to invest in seemingly legitimate cryptocurrencies and then keep the money for themselves.
Prosecutors said he initiated the transactions after communicating with the scammer on WhatsApp, but the identity of the scammer remains unknown.
But Hanes soon began embezzling public funds to finance his so-called cryptocurrency enterprises.
In early 2023, he stole $40,000 from Elkhart Christian Church and $10,000 from the Santa Fe Investment Club, according to prosecutors and defense documents reported by CNBC.
His attorneys said he withdrew $60,000 from his daughter’s college account and about $1 million worth of stock from Elkhart Financial.
Then he turned and walked towards his workplace.
In May 2023, he reportedly wired $5,000 from Heartland Tri-State Bank to an account controlled by the scammers.
Two weeks later, he upped the ante by transferring $1.5 million from his bank account. The next day, he transferred another $1.5 million, court documents show.
Three days later, he made two wire transfers totaling $6.7 million, two weeks later another $10 million, and a few days later another $3.3 million, court documents said.
Prosecutors said he manipulated bank employees to complete the wire transfers.
According to the report from the Federal Reserve Board’s Office of Inspector General, employees at these heartland banks violated the banks’ own policies to approve the transfers.
The report said bank employees may have been reluctant to question Hanns because he was the CEO.
Mitchell told CNBC that Hans fell into a pattern of wire transfers because the scammers told him that each investment would require a new transaction to unlock the returns on previous investments — a pattern that was exposed by Hans’ panicked calls to his neighbors just before 8 a.m. on July 5, 2023.
Mitchell said Hanis told him he was “the only one” who could help him. Mitchell, who had beaten prostate cancer decades earlier, thought his friend was suffering from the same disease.
Mitchell met Hans at the bank that morning before it opened for business.
“The first thing he said was, ‘Brian, I need to borrow $12 million for 10 days, and I’ll give you $1 million as a loan,” Mitchell told CNBC. “I sat there and asked myself, am I in a bank in Elkhart, Kansas, or am I in an alley in Chicago with loan sharks?”
Mitchell asked Hanes why he needed the money, so Hanes “pulled out his phone, pretended to log in, and showed me this account with $40 million, $42 million,” Mitchell told CNBC.
Mitchell said Hanes told him the millions were in cryptocurrency and that he needed $12 million to verify the funds.
Mitchell said Hanes said he had spoken with a banker named “Jim” in Denver and “another individual in Oklahoma” who had cashed out large sums of money after investing in cryptocurrencies held in Coinbase accounts.
“I told him, ‘Man, you got ripped off. You got ripped off,’ ” Mitchell said.
“I stopped him and asked him: ‘Are you playing Money in the Bank?’ He said: ‘No, Brian.’”
Mitchell said Hanes told him the $12 million would “activate” funds he had transferred to a crypto account in Hong Kong.
“I said, ‘Get on a plane, go to Hong Kong, hire a translator, go get a bank check’ for the funds that were allegedly stored there,” Mitchell told CNBC.
“And I said, ‘I’m not lending you any money.’ I said, ‘You’re being ripped off, walk away.’”
But prosecutors said Hanes didn’t stop there. Later that day, he had bank employees wire another $8 million, and two days later, another $4.4 million.
Mitchell said he was unaware of the previous wire transfers but was concerned that Hanis might transfer the $12 million he mentioned that morning.
The following week, Mitchell said, a “nervous” bank clerk told Mitchell that Hanis had wired the money from the bank.
Mitchell said he spoke with a board member and an attorney that evening.
Within days, Hanes was fired, and two weeks later, the bank was closed and taken over by the Federal Deposit Insurance Corporation (FDIC).
Depositors didn’t lose any money because Dream First Bank in Syracuse, Kansas, assumed responsibility for their deposits, but shareholders were robbed of their money, CNBC reported.
The bank had total assets of nearly $140 million and total deposits of $130 million the year before, the report said.
Hans was charged last February and placed under house arrest until sentencing this week.
Mitchell said he spoke with neighbors while mowing their lawns, and Hanes still believes there is a way to recover the money.
“He said … ‘Just give me two more months and I can get my money back,’ ” Mitchell told CNBC.
Mitchell said Brooms told the audience to “forgive” Shan Weijian before announcing the verdict.
Mitchell said Brooms said, “I know he hurt you, I know that, but I want you to move on, I want you to find some joy in your life. Let me discipline him.”
“He was the pig being slaughtered,” wrote John Stein, Hans’ attorney. “Mr. Hans’ vulnerability to the ‘pig butcher’ scheme led him to make some very poor decisions for which he is deeply sorry, as it resulted in losses to the bank and losses to its shareholders.”
Kate Brubacher, U.S. Attorney for the District of Kansas In a statement “Hans’ greed knew no bounds. He violated his professional obligations, personal relationships, and federal law.”
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