Ex-CEO of Kansas bank sentenced to over 24 years for $47m crypto fraud

A former Kansas bank CEO has been sentenced to more than 24 years in prison for embezzling $47 million in a cryptocurrency scam that led to the bank’s collapse.

Shan Hanes, the former chief executive of now-bankrupt Heartland Tri-State Bank, was sentenced to 293 months in prison after a court found she embezzled “tens of millions of dollars” in a cryptocurrency scheme that led to the bank’s collapse.

Hanes, who pleaded guilty to a charge of embezzlement by a bank teller, made a dozen wire transfers totaling more than $47 million from Heartland Tri-State Bank to a crypto wallet between May and July 2023 in a scheme known as “hog cutting,” the Kansas U.S. Attorney’s Office said in a press release on Aug. 19.

At the time, the bank was insured by the Federal Deposit Insurance Corporation, which covered the $47.1 million loss resulting from Hanes’ actions. The fraudulent scheme not only led to the bank’s bankruptcy, but also resulted in a $9 million loss for its investors.

U.S. Attorney Kate E. Brubacher said Hanes “breached his professional obligations” and that the sentence was “a measure of justice for the victims and an expression of the U.S. Department of Justice’s commitment to holding accountable those who violate positions of trust for their own benefit.”

Hanes’ case highlights the risks in the crypto sector, where the pseudo-anonymous nature of blockchain networks can appeal to those looking for quick and potentially illicit profits. The sentencing follows that of Reginald Fowler, a former Minnesota Vikings co-owner who was sentenced to six years in prison in 2018 for running a “shadow bank” in the crypto sector involving more than $700 million in unregulated transactions.