FBI recovers more than $8m for victims of Kansas bank crypto scheme

Federal law enforcement has managed to recover $8.3 million lost to investors in a crypto embezzlement case involving the CEO of a Kansas bank.

According to a report by the Associated Press, the Federal Bureau of Investigation managed to recover lost funds from the cryptocurrency account held by Tether (USDT) in the Cayman Islands. Those funds amounted to $8.3 million in investments from 30 shareholders, including community members close to the convicted CEO.

Shan Hanes, former chief executive officer of Heartland Tri-State Bank, was sentenced to 293 months in prison after a court found she embezzled approximately $47.1 million in a crypto scheme that led to the bank’s collapse.

Fortunately, the $47.1 million fund was insured by the Federal Deposit Insurance, which covered the victims’ losses. However, Hanes’ scheme led to the collapse of Heartland Tri-State Bank and a loss of $9 million to its investors.

On November 4, the FBI was able to recover $8.3 million in funds linked to the fraud and compensate the victims.

“With Hanes’ conviction and sentence, the Department of Justice achieved justice for the victims, and now with this court order, these victims will receive some financial relief,” U.S. Attorney Kate E. Brubacher said in a statement.

The fraud took place in the summer of 2023, according to court records. In just eight weeks, Hanes withdrew $47.1 million from customer accounts through 11 wire transfers. He said the payment was necessary to terminate investments and withdraw funds from a crypto website, according to court records.

Prosecutors said Hanes was duped into a scam they called a “pork butchery,” in which a third party persuades the victim to invest all his money in cryptocurrency and then the funds disappear.

According to court records, Hanes purchased what he believed to be $5,000 worth of cryptocurrency in late 2022 at the direction of someone he contacted via WhatsApp. A few months later, he turned over his church and investment club funds before withdrawing money from client accounts, leading to the collapse of Heartland Tri-State Bank.

In August 2024, Hanes was sentenced to more than 24 years in prison for embezzling $47.1 million from client accounts.