Former Heartland Tri-State Bank CEO Shan Hanes pleaded guilty to embezzlement last week after stealing $47.1 million from his bank, leading to its collapse.
Hanes, who was charged in February, transferred the funds between May and July 2023 to crypto wallets operated by unidentified individuals. He made 11 transactions between $5,000 and $10.3 million.
The then-CEO, according to a report by the Office of the Inspector General, had fallen victim to a “pig butchering” scheme, where crypto scammers “fatten” victims up with a pledge of profitable returns but “slaughter” them before making good on their promises.
Brian Mitchell, a Heartland customer and friend of Hanes, alerted authorities that something might be awry when Hanes asked him for a $12 million loan to take his money out of a crypto investment, which had run into a supposed wire transfer issue. Mitchell declined to lend the money.
“Significant internal control breakdowns and the influence of the CEO as a dominant management official created an opportunity for the series of apparently fraudulent wire transfers to be initiated and processed. These wire transfers significantly impaired Heartland’s capital and liquidity, causing the bank to become insolvent,” the OIG wrote in February, seven months after the bank collapsed in July.
Hanes, a three-decade employee of Heartland and its predecessor, got involved in crypto in January 2023 with his own money, according to court documents. But later that month, he embezzled $30,000 from Elkhart Church of Christ; and by March was embezzling funds from Heartland, according to the documents. In April, he took an additional $10,000 from the church, and an additional $10,000 from the Santa Fe Investment Club, the documents indicate.
“Shan Hanes is a liar and a master manipulator who caused Heartland Tri-State Bank to collapse. Even as he was squandering away tens of millions of dollars in cryptocurrency, Hanes orchestrated schemes to cover his tracks concerning the losses at the bank,” said U.S. Attorney Kate Brubacher in a prepared statement May 23.
“Many victims will never fully recoup losses to their life savings and retirement funds, but at least we at the Department of Justice can see that Hanes is held criminally responsible for his actions,” Brubacher said.
Both nonbank organizations from which Hanes embezzled money have since dissolved, according to the Kansas Reflector.
The Elkhart Church of Christ, of which Hanes was a member and an occasional funeral officiant, didn’t close because of loss of funds — a third party stepped in to cover the hole — but because, as a small congregation, it was hard to overcome scandal, Mitchell said.
The Santa Fe Investment Club was liquidated, according to Mitchell, but “nobody [in the club] was shorted when all was said and done.”
Dream First Bank, which acquired Heartland shortly after its collapse, did not return a request for comment.
Hanes faces 30 years in prison. His sentencing is set for Aug. 8.
