The FBI has successfully recovered $8.3 million for investors affected by a cryptocurrency embezzlement scheme linked to the former CEO of Heartland Tri-State Bank in Kansas.
As reported by the Associated Press, federal authorities retrieved the lost funds from a cryptocurrency account with Tether in the Cayman Islands. This recovery will benefit 30 shareholders, including local community members connected to the convicted CEO, Shan Hanes.
Hanes, who served as the bank’s chief executive, was sentenced to 293 months in prison after being found guilty of embezzling approximately $47.1 million through a fraudulent crypto operation that ultimately led to the bank’s demise. While the Federal Deposit Insurance Corporation (FDIC) insured the $47.1 million, covering victims’ losses, the scheme resulted in a $9 million shortfall for investors.
On November 4, the FBI announced the successful recovery of $8.3 million linked to the fraud, providing much-needed restitution for the victims. U.S. Attorney Kate E. Brubacher remarked, “Through Hanes’ conviction and prison sentence, the Department of Justice obtained justice for the victims, and now with this court order, those victims will receive some financial relief.”
The fraudulent activities occurred during the summer of 2023 when Hanes executed 11 wire transfers, extracting $47.1 million from customer accounts within an eight-week span. Court documents reveal that Hanes believed these withdrawals were necessary to conclude investments and cash out on a cryptocurrency platform.
Prosecutors described Hanes as falling victim to a scam known as “pig butchering,” in which a third party persuades the victim to invest all their money into cryptocurrency, only for the funds to disappear. In late 2022, Hanes initially purchased what he thought was $5,000 worth of cryptocurrency based on instructions from a contact via WhatsApp. Subsequently, he misappropriated funds from both his church and investment club before siphoning money from customer accounts, resulting in the collapse of Heartland Tri-State Bank.
In August 2024, Hanes was sentenced to over 24 years in prison for his role in embezzling $47.1 million from the bank’s customers.
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