Cryptocurrency scam lands former bank boss in jail for blowing up bank

Scams come in all shapes and sizes, but one technique is particularly scary and it is called “Pig slaughter,” This involves a person spending a lot of time building a relationship with their victim, only to eventually present them with a “business opportunity” that will ruin them financially.

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It is perhaps one of the cruelest forms of fraud, as it involves building trust with a person through a supposedly genuine relationship. Unbeknownst to the victim, that trust is destroyed after the scammer runs off with the money. 53-year-old Shan Hanes, former CEO of Heartland Tri-State Bank in Elkhart, Kansas, fell for this type of scam and was sentenced to 24 years in prison for the illegal transfer of $47.1 million that led to the bank's collapse.

The eleven transactions Hanes made between May and July 2023 resulted in the bank's investors losing $9 million, forcing the Federal Deposit Insurance Corporation (FDIC) to absorb the $47 million loss and seize the bank. Some of the bank's clients lost almost all of their retirement funds, which funnily enough also applied to Hanes, who lost all of his embezzlement money.

“Mr. Hanes, the CEO of Heartland Tri-State Bank, enjoyed the trust of the community of Elkhart, Kansas, but he abused that trust. He attempted to enrich himself financially by embezzling the bank's funds. His get-rich-quick scheme was actually a pig slaughtering scheme. His involvement in that scheme ultimately led to the bank's collapse. His job, the bank's job, was to protect its customers and identify fraudulent schemes – not to participate in them.” said Special Agent in Charge Stephen Cyrus of the FBI Kansas City Field Office

So how did this happen? The pig slaughter system works by securing an initial investment from a victim, and then multiple requests for additional funds follow to “safely” or “guarantee” Investments made so far will pay off. This would be in view of the “Slaughter“-phase of the scheme.

In Hanes' case, the former bank executive initially invested thousands of his own money. Then he began stealing from local organizations and his daughter's college fund. This eventually led to nearly $50 million being transferred from the bank, even though Hanes had been warned he was being scammed.