The
Shan Hanes, who was president and CEO of the $139 million-asset bank until it was seized by regulators on July 28, allegedly wired $12 million in connection with what he told one bank customer was a cryptocurrency investment, according to the report.
The new reporting comes two months after Kansas Banking Commissioner David Herndon said the bank "
The Bloomberg Businessweek report, which is based on interviews with three anonymous sources, sheds new light on the abrupt demise of Heartland, which is the fourth and smallest bank failure to date this year.
The unnamed Heartland client told Bloomberg that Hanes asked him if he could borrow $12 million to deal with the crypto problem. Hanes told the client that someone was trying to help him invest money in crypto, but there was trouble with the wire payments, the report said. Hanes told the client that the bank's money wasn't involved, but two sources told Bloomberg that it actually was.
The client wound up declining Hanes' request for the loan. A week later, when the same client learned that Hanes made the $12 million wire transfer after all, he contacted a director of the bank's board and warned that the bank might be at risk, Bloomberg Businessweek reported.
Regulators stepped in, Heartland was declared insolvent and the Federal Deposit Insurance Corp. was appointed as the bank's receiver.
Dream First Bank of Syracuse, Kansas,
Hanes, whose banking career started in 1993, hasn't been accused of wrongdoing. The onetime agriculture loan officer, who is a former chair of the Kansas Bankers Association, didn't respond to Bloomberg Businessweek's questions, the report said.
Heartland's closure followed the failures of Silicon Valley Bank, Signature Bank and First Republic Bank, which experienced massive deposit runs that ultimately led to their downfalls.
Heartland experienced no such deposit run, but rather went through
A post-mortem report by the FDIC on Heartland's failure has not yet been released.
