Former Elkhart Bank CEO Sentenced to 24 Years in Prison for Embezzlement in Crypto Scheme

WICHITA, Kan. (KAKE) – The former CEO of a southwest Kansas bank has been sentenced to over 20 years in prison for embezzlement.

Former Heartland Tri-State Bank CEO Shan Hanes was sentenced to more than 24 years in prison for his role in embezzling tens of millions of dollars from the now failed bank. He was not ordered to pay restitution because prosecutors want the funds to go back to the bank.

Court documents show Hanes made $47 million in wire transfers from the Elkhart based-bank in an effort to purchase cryptocurrency in a scheme known as “pig butchering”. Prosecutors said the loss of the $47 million caused the bank to fail in July 2023. Prosecutors also allege Hanes purchased cryptocurrency with funds embezzled from a church and local investment club.

When the bank failed, the Federal Deposit Insurance Corporation took control and reopened it as Dream First Bank. Heartland Tri-State Bank had approximately $139 million in total assets and $130 million in total deposits, the FDIC said. Dream First Bank agreed to buy “essentially all” of Heartland Tri-State’s failed assets.

During Monday’s sentencing, the courtroom was filled with people from Elkhart. Not one of them testified in support of Hanes.

“Hanes’ greed knew no bounds. 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,” said U.S. Attorney Kate E. Brubacher. “Today’s sentence is a measure of justice for the victims, and a statement that the U.S. Department of Justice will hold those accountable who violate positions of trust for their own gain.”

“Mr. Hanes, as the CEO of Heartland Tri-State Bank, held the trust and confidence of the community of Elkhart, KS, but he violated that trust. He attempted to benefit financially by embezzling funds from the bank. His idea to get rich quick, in all reality, was a pig butchering scheme. His involvement in this scheme ultimately led to the bank’s collapse. His job, the bank’s job was to protect its customers and identify fraudulent scams – not to participate in them,” said Special Agent in Charge Stephen Cyrus of the FBI Kansas City Field Office.

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