A one-time executive found guilty of embezzling millions from his
The Federal Reserve earlier this week banned
The action comes after Hanes pleaded guilty to embezzling some $47 million of bank funds and funneling them into his own crypto wallet before transferring them to multiple unidentified third parties that proved to be scammers. The theft contributed to the bank's deterioration and ultimately its failure in July 2023.
After the failure, Heartland Tri-State's $139 million of assets were absorbed by Syracuse, Kansas-based Dream First Bank, but the episode still resulted in losses to the Deposit Insurance Fund.
As a result of the failure, the DIF had to absorb a $47 million loss to make depositors whole. Bank shareholders lost an additional $9 million. As part of a criminal settlement, Hanes agreed to pay $60.5 million in restitution.
His actions have also earned significant jail time. In August, he was sentenced to 293 months — nearly 24.5 years — in prison after pleading guilty to one count of embezzlement by a bank officer.
The Department of Justice said Hanes had fallen victim to a "pig butchering" scam, in which bad actors befriend someone and persuade them to funnel money into bogus crypto investments. Such schemes typically involve the scammer showing fake gains that make it appear as if an investment is legitimate and profitable to induce the target to contribute more.
"Mr. Hanes, as the CEO of Heartland Tri-State Bank, held the trust and confidence of the community of Elkhart, KS, but he violated that trust," said Stephen Cyrus, special agent in charge of the FBI's Kansas City field office, in a written statement earlier this year. "He attempted to benefit financially by embezzling funds from the bank. His idea to get rich quick, in all reality, was a pig butchering scheme. His involvement in this scheme ultimately led to the bank's collapse. His job, the bank's job, was to protect its customers and identify fraudulent scams – not to participate in them."
