Former Bank CEO Agrees to Plead Guilty in $47M Cryptocurrency Embezzlement Scheme

News | June 4, 2024 By:

A major alleged embezzlement scheme involving cryptocurrency and stemming from a small Kansas bank was outlined in a plea agreement filed on May 23, 2024, in federal court. Shan Hanes, the former CEO of Heartland Tri-State Bank in Elkhart, Kansas, has been charged with embezzlement by a bank officer.

According to the documents filed in the U.S. District Court for the District of Kansas, Hanes is accused of initiating a series of unauthorized wire transfers from Heartland Tri-State Bank totaling approximately $47.1 million between May and July 2023. The funds were allegedly sent to multiple cryptocurrency wallets controlled by unidentified third parties.

Prosecutors claim Hanes began discussing cryptocurrency investments with an unknown person as early as December 2022 over the messaging platform WhatsApp. In January 2023, Hanes allegedly transferred $5,000 of his own money to a cryptocurrency exchange. The court filing states that over the next few months, Hanes embezzled additional amounts totaling around $50,000 from two churches and an investment club.

The plea agreement provides that beginning in May 2023, Hanes started directly wiring money out of Heartland Tri-State Bank, which is insured by the Federal Deposit Insurance Corporation. Over a two month period, Hanes is said to have made 10 transfers totaling $47.1 million. As a result of the missing funds, Heartland Tri-State Bank suffered a failure, wiping out the equity of its investors.

As part of the plea deal, Hanes has agreed to plead guilty to one count of embezzlement by a bank officer, which carries a statutory maximum penalty of 30 years in prison and a $1 million fine. Prosecutors will not bring any additional charges against Hanes relating to the scheme.

The former bank executive must also forfeit any funds recoverable from the identified cryptocurrency wallets. He is further obligated to pay restitution estimated at $47.1 million to victims, including the Federal Deposit Insurance Corporation and stockholders of Elkhart Financial Corporation.

According to the filing, Hanes will cooperate fully with ongoing investigations into his finances. This includes disclosing financial records and consenting to property seizure and future banking industry bans, if necessary. As part of the agreement, prosecutors may recommend a reduced sentence depending on Hanes’ continued acceptance of responsibility and truthful cooperation.

The high-dollar figures and cross-border nature of cryptocurrency transactions have made this a complex case for investigators. However, the detailed plea agreement gives victims a path toward recovery and sets the stage for Hanes to be held accountable for the massive alleged fraud.

Please contact BlockTribune for access to a copy of this filing.