In a startling breach of trust, the CEO of Heartland Tri-State Bank is facing charges for orchestrating an embezzlement of $47 million. The high-profile case came to light following revelations that the bank played a central role in a sophisticated ‘pig butchering’ scheme, according to a February 12 press release from the U.S. Attorney’s Office.
What Penalty Will The CEO Of Heartland Tri-State Bank Face?
Shan Hanes, former CEO of the now-defunct Heartland Tri-State Bank, has been formally charged with one count of bank embezzlement and is facing a maximum sentence of 30 years in prison.
Hanes is accused of defrauding the bank through a series of wire transfers “to purchase cryptocurrency for his own benefit” between May 2023 and July 2023.
The former CEO was purportedly the target of a “pig butchering” scam, defined by the Financial Crimes Enforcement Network (FinCEN) as a scheme wherein “victims invest in supposedly legitimate virtual currency investment opportunities before they are conned out of their money.”
“Scammers refer to victims as ‘pigs,’ and may use fictitious identities, the guise of potential relationships, and elaborate storylines to “fatten up” the victim into believing they are in trusted partnerships before they defraud the victims of their assets—the ‘butchering,’” the statement from FinCEN read.
The exact “pig butchering” scam Hanes was involved in has yet to be publicized.
The Specifics Of The Pig Butchering Scam
Hanes was arrested after a new regulatory review revealed that Hanes “executed small cryptocurrency transactions through another bank as early as January 2023” involving “personal funds and funds potentially belonging to other entities.”
Report: Material Loss Review of Heartland Tri-State Bankhttps://t.co/uzPSZ9nRQT
— Federal Reserve-CFPB OIG (@OIGFedCFPB) February 12, 2024
When Hanes was asked to provide explanations for the series of wire transfers made between May and June of last year, investigators found his answers to be “unreliable and inaccurate” as they “did not make sense and were difficult to follow.”
Upon review, investigators concluded that Hanes’ “transactions to cryptocurrency exchanges that are of increasing amounts over time appear to be consistent with the progression of a pig butchering scam.”
Connections To 2023’s Banking Crisis
Additionally, the regulatory review revealed that Heartland Tri-State Bank took $21 million from the Federal Home Loan Banking System before its collapse in July 2023.
The Federal Home Loan Banking System has faced criticism for its role in the 2023 banking crisis after having loaned out $30 billion to Signature Bank, Silvergate, and Silicon Valley Bank.
A recent Bloomberg report by banking reporter Austin Weinstein stated that the Federal Home Loan Banking System has “morphed from their Depression-era roots in home lending to a general liquidity backstop for banks of all sizes.”
Meanwhile, Hanes’ first court appearance for his part in the crypto scam has been scheduled for February 28 in Wichita, Kansas.
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