Former US Bank CEO Sentenced To 24 Years For $47 Million Cryptocurrency Fraud

A former chief executive officer (CEO) of a US bank has been sentenced to over 24 years in federal prison for his involvement in a $47 million cryptocurrency fraud scheme. Shan Hanes, the former CEO of Heartland Tri-State Bank, was convicted for orchestrating a series of wire transfers and embezzling funds that led to the bank’s collapse and Federal Deposit Insurance Corporation’s (FDIC) takeover in 2023.

The Fraudulent Scheme Unveiled

Shan Hanes, 53, fell victim to a “pig butchering” scam, a type of cryptocurrency fraud where scammers deceive individuals into making large investments under the false promise of substantial returns. According to CNBC, Hanes was duped into buying cryptocurrency with the assurance of unlocking supposed returns on his investments. However, these returns never materialized, and Hanes lost the money he embezzled.

Between May and June 2023, Hanes orchestrated a series of wire transfers from Heartland Tri-State Bank’s accounts. His criminal activities extended beyond the bank, involving embezzlement from a local church, an investment club, and even his daughter’s college savings account. The scammers manipulated him into investing more money into cryptocurrency, falsely claiming that additional funds were needed to secure the promised returns.

The Collapse of Heartland Tri-State Bank

The fraudulent activities led to the downfall of Heartland Tri-State Bank in Elkhart, Indiana. Hanes’s embezzlement contributed significantly to the bank’s failure, which was one of only five US banks to collapse in 2023. The FDIC intervened and took over the bank, highlighting the severe impact of Hanes’s actions on both the institution and its stakeholders.

Legal Proceedings and Sentencing

Last week, US District Judge John Broomes sentenced Shan Hanes to 24 years in prison, exceeding the 29-month sentence requested by prosecutors. Hanes had previously pleaded guilty in May to a single count of embezzlement by a bank officer.

“Hanes’ greed knew no bounds,” US Attorney Kate E. Brubacher remarked in a statement. “He trespassed his professional obligations, his personal relationships, and federal law. Not only did Shan Hanes betray Heartland Bank and its investors, but his illegal schemes also jeopardized confidence in financial institutions,” Brubacher added.

Community Reactions and Personal Consequences

During the sentencing, Brian Mitchell, Hanes’s longtime next-door neighbor, described the former CEO’s actions as “pure evil.” Mitchell also noted that Hanes exhibited little remorse for his criminal conduct during the proceedings.

Hanes’s fraudulent activities began in late 2022 after he was targeted by scammers. He initially used personal funds to invest in cryptocurrency but soon escalated his theft. By early 2023, he had misappropriated $40,000 from Elkhart Church of Christ, $10,000 from the Santa Fe Investment Club, and $60,000 from his daughter’s college fund. Additionally, he stole nearly $1 million in stock from Elkhart Financial Corporation before shifting to wire transfers from Heartland Tri-State Bank to accounts controlled by the scammers.

Hanes was terminated from his position and placed under house arrest following the bank’s takeover by the FDIC. He was charged in February 2024 and faced his sentencing last week.