The ex-CEO of a small Kansas bank was sentenced to more than 24 years for stealing a whopping $47 million – and he never saw a profit, according to court documents.
Former Heartland Tri-State Bank CEO Shan Hanes was duped by scammers in a “pig butchering” scheme who persuaded him to send millions of dollars via wire transfers with promises to unlock his returns on crypto investments, federal prosecutors said.
The 53-year-old orchestrated a series of wire transfers over eight years that collapsed the Elkhart bank and led to a FDIC takeover – making it one of only five US banks that failed in 2023, according to a CNBC report.
Hanes had seemed like a “good guy,” according to a resident who lived in his small town of 2,000 people in southwestern Kansas.
Hanes helped fellow members of his community. He preached at the local church.
And he was an active member of the banking community, serving on the board of American Bankers Association and Kansas Bankers Association and testifying before Congress about community banking.
But Hanes had been embezzling money from the church, a local investment club and one of his three daughter’s college savings accounts – all of which he lost to the scammers, according to court records.
On Monday, US District Judge John Broomes sentenced Hanes to 24 years – 29 months longer than what prosecutors requested after he pleaded guilty to a single count of embezzlement by a bank officer in May, according to the report.
Despite shuttering the bank he led and wiping out shareholders’ savings, Hanes reportedly showed little – if any – remorse during his hearing, a community member told CNBC.
Brian Mitchell, Hanes’ longtime next-door neighbor, said he called the ex-CEO’s actions “pure evil” during the sentencing.
Mitchell — whose farm and movie chains had banked at Heartland — told CNBC about 30 bank shareholders attended Hanes’ sentencing after the failure decimated their stock value.
Some residents “lost 70, 80% of their retirement,” he told CNBC.
One local woman is “struggling to afford a nursing home” for her 93-year-old mother while another woman can no longer afford to retire, he said.
Though not a bank shareholder himself, Mitchell had belonged to the investment club pilfered by Hanes.
In the courtroom, “Shan was facing the judge, and he just looked over his left shoulder for a second, and didn’t make eye contact, and said, ‘Sorry,’” Mitchell said.
But Hanes did have a look of “absolute shock” when Broomes issued the 24-year-long sentence and ordered Hanes be taken into immediate custody, Mitchell said.
Hanes became the “pig” in a “pig-butchering scheme” – when scammers convince a victim to invest in what seems like legitimate crypto and then keep the money for themselves – in late 2022, first using his own funds, prosecutors said.
He started making the transactions after communicating with the scammers on WhatsApp – whose identities are still unknown, prosecutors said.
But Hanes quickly pivoted to embezzlement to fund his supposed crypto ventures.
In early 2023, he stole $40,000 from Elkhart Church of Christ and $10,000 from the Santa Fe Investment Club, according to prosecutors and a defense filing reported by CNBC.
He took $60,000 out of his daughter’s college account and about $1 million in stock from the Elkhart Financial Corporation, his lawyer said.
Then he turned to his place of work.
In May 2023, he made a wire transfer of $5,000 from Heartland Tri-State Bank to accounts the scammers controlled, according to the report.
Two weeks later, he upped the ante – wiring $1.5 million out of the bank. The next day, he transferred another $1.5 million, according to court documents.
Three days later, he sent two wire transfers totaling $6.7 million – then $10 million two weeks later and $3.3 million days later, court documents said.
He manipulated bank employees into completing the wire transfers, prosecutors said.
Those Heartland bank employees broke the bank’s own policies to approve the transfers, according to a report by the Office of the Inspector General of the Board of Governors of the Federal Reserve System.
The report said bank employees were likely reluctant to question Hanes because of his role as CEO.
Hanes fell into a pattern of wire transfers as scammers told him that each investment required a new transaction to unlock the prior investment’s returns – a pattern Hanes exposed when he called his neighbor in a panic before 8 a.m. on July 5, 2023, Mitchell told CNBC.
Mitchell said Hanes told him he was “the only guy” who could help – and Mitchell, who had survived prostate cancer decades ago, figured his friend was suffering from the same disease.
Mitchell met Hanes at the bank before it opened to customers that same morning.
“The first thing he says is, ‘Brian, I need to borrow $12 million for ten days, and I’ll give you $1 million for loaning it to me,’ ” Mitchell told CNBC. “I’m sitting there and I said, am I in a bank in Elkhart, Kansas, or in an alley with a loan shark in Chicago.”
Mitchell asked why Hanes needed the money, so Hanes “pulls out his phone and acts like he’s logging in and he shows me this account that has $40 million, $42 million,” Mitchell told CNBC.
Hanes told him the millions were in crypto and he needed $12 million to verify the funds, Mitchell said.
Hanes said he had talked to a banker in Denver named “Jim” and “another guy in Oklahoma” who had cashed out big after investing in crypto held in Coinbase accounts, Mitchell said.
“I told him, ‘You’re in a scam, dude. You’re in a scam,’ ” Mitchell said.
“I stopped him and said, ‘Is this bank money you’re playing with?’ And he said, ‘No, Brian.’”
Hanes told him the $12 million would “activate” funds he had transferred to a crypto account in Hong Kong, Mitchell said.
“I said, ‘Get on a plane, go to Hong Kong, hire an interpreter, and go get a bank check’” for the funds supposedly held there,” Mitchell told CNBC.
“Then I said, ‘I’m not going to loan you the money.’ I said, ‘You’re in a scam, walk away.’”
But Hanes didn’t walk away – he had bank employees wire another $8 million later that day and $4.4 million two days later, prosecutors said.
Mitchell said he was unaware of the previous wire transfers, but was worried Hanes might transfer the $12 million he had mentioned that morning.
The following week, a “stressed” bank employee told Mitchell that Hanes had wired money out of the bank, he said.
Mitchell said he talked to a board member and an attorney that night.
Within days, Hanes was fired – and two weeks later, the bank was shuttered and taken over by the FDIC.
Depositors did not lose any money, as Dream First Bank in Syracuse, Kansas assumed their deposits – but shareholders were wiped clean, according to CNBC.
The year before, the bank had almost $140 million in total assets and $130 million in total deposits, the report said.
Hanes was charged last February and placed under house arrest until his sentencing this week.
Mitchell said he spoke to his neighbor while he was mowing his yard – and Hanes still believed there had been a way to recover the money.
“He said … ‘If I just had another two months I could get the money back,’” Mitchell told CNBC.
Broomes told audience members to “forgive” Shan before he issued his sentence, Mitchell said.
“I know that he’s hurt you, I know this, but I want you to move on, and I want you to find some joy in your life. Let me discipline him,’” Broomes said, according to Mitchell.
“He was the pig that was butchered,” Hanes’ lawyer John Stang wrote. “Mr. Hanes’s vulnerability to the Pig Butcher scheme caused him to make some very bad decisions, for which he is truly sorry for causing damage to the bank and loss to the Stockholders.”
Kansas U.S. Attorney Kate Brubacher said in a statement that “Hanes’ greed knew no bounds. He trespassed his professional obligations, his personal relationships, and federal law.”
