Shan Hanes, the former CEO of Heartland Tri-State Bank, was sentenced to 293 months in federal prison for embezzling $47.1 million in a cryptocurrency fraud scheme. This scheme, known as “pig butchering,” involved luring unsuspecting investors into fraudulent digital asset investments through unauthorized wire transfers. Hanes executed 11 of these transfers between May and July 2023, directing the bank’s funds to a cryptocurrency wallet.
The fraudulent transfers orchestrated by Hanes ultimately led to the collapse of Heartland Tri-State Bank. The Federal Deposit Insurance Corporation (FDIC), which insured the bank at the time, absorbed a loss of $47.1 million. Additionally, the bank’s investors suffered a $9 million hit as the institution failed under the weight of the fraud. The bank was unable to recover its funds as the transfers were made to multiple cryptocurrency accounts controlled by unidentified third parties.
U.S. Attorney Kate E. Brubacher condemned Hanes for his actions, calling out his limitless greed that betrayed not only Heartland Tri-State Bank and its investors but also jeopardized confidence in financial institutions. FBI Special Agent in Charge Stephen Cyrus emphasized that Hanes had exploited his position of trust within the Elkhart community for personal gain, leading to the bank’s collapse. Korey Brinkman, Special Agent-in-Charge of FHFA-OIG’s Central Region, highlighted the severe breach of trust caused by Hanes’s actions, resulting in significant losses for bank customers.
The sentencing of Shan Hanes sends a clear message to executives who compromise the stability of community banks. Jon Ellwanger, a special agent involved in the case, expressed pride in the collaboration with federal law enforcement that led to Hanes being held accountable for his crimes. The case serves as a warning that individuals like Hanes, who abuse their positions for personal gain, will face justice for their actions.
The downfall of Heartland Tri-State Bank serves as a cautionary tale of the devastating consequences that can result from embezzlement and cryptocurrency fraud. It underscores the importance of holding accountable those who betray the trust placed in them by their communities and institutions.
Leave a Reply