Former CEO of Elkhart Bank sentenced to 24 years in prison for embezzlement in crypto system

WICHITA, Kansas (KAKE) – The former CEO of a southwest Kansas bank has been sentenced to more than 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 returned to the bank.

Court documents show Hanes made $47 million in wire transfers from the Elkhart-based bank to buy cryptocurrencies, a scheme known as “pig slaughter.” Prosecutors said the loss of the $47 million caused the bank's bankruptcy in July 2023. Prosecutors also allege Hanes bought cryptocurrencies with funds he embezzled from a church and a 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 total assets of about $139 million and deposits totaling $130 million, according to the FDIC. Dream First Bank agreed to buy “substantially all” of Heartland Tri-State's failed assets.

At the sentencing on Monday, the courtroom was packed with Elkhart residents. None of them testified in Hanes' favor.

“Hanes' greed knew no bounds. He violated his professional duties, his personal relationships, and federal law. Shan Hanes not only defrauded Heartland Bank and its investors, but also undermined trust in financial institutions with his illegal activities,” said U.S. Attorney Kate E. Brubacher. “Today's verdict is a sign of justice for the victims and a sign that the U.S. Department of Justice will hold accountable those who abuse positions of trust for their own benefit.”

“As CEO of Heartland Tri-State Bank, Mr. Hanes enjoyed the trust of the community of Elkhart, Kansas, but he abused that trust. He sought to enrich himself financially by embezzling the bank's funds. His get-rich-quick scheme was actually a pig slaughtering scheme. His involvement in that scheme ultimately led to the bank's collapse. His job, the bank's job, was to protect its customers and detect fraudulent schemes – not to participate in them,” said Special Agent in Charge Stephen Cyrus of the FBI's Kansas City Field Office.