The Fed has now banned a bank CEO from the industry, following a sentencing of 24 years, it announced on Thursday.
The Federal Reserve announced on Thursday that it has prohibited Shan Hanes, the former CEO of Heartland Tri-State Bank, from participating in the banking industry.
This action comes in the wake of Hanes’s involvement in a cryptocurrency scheme that resulted in the embezzlement of $47.1 million in bank funds, ultimately leading to the bank’s collapse in July 2023.
According to a news release from the Fed, Hanes exploited his position to orchestrate the fraudulent transfers that contributed to the bank’s failure.
He served as CEO from August 2017 until the bank’s closure.
Between May and July 2023, Hanes executed ten wire transfers, amounting to $47.1 million, sending bank funds to his personal cryptocurrency wallet and then to various accounts controlled by unidentified third parties.
Despite claiming he was “investing in lucrative digital currency products,” Hanes was actually diverting funds to scammers, which led to the bank’s insolvency.
The Federal Deposit Insurance Corporation (FDIC) took control of Heartland Tri-State Bank in July 2023 and subsequently sold it to Dream First Bank.
The FDIC covered the loss, but investors in the bank faced a $9 million loss.
Hanes was charged in February and pleaded guilty in May, agreeing to pay restitution of up to $60.5 million.
His 24-year prison sentence, handed down in August, represents the maximum penalty allowed for embezzlement as a banking officer.
The fraudulent operation was described as a “pig butchering” scheme, a term used to illustrate how scammers “fatten” victims with promises of high returns before ultimately “slaughtering” them by disappearing with their funds.
U.S. Attorney for the District of Kansas, Kate E. Brubacher, condemned Hanes’s actions, stating, “Hanes’ greed knew no bounds.
He trespassed his professional obligations, his personal relationships, and federal law.
Not only did Shan Hanes betray Heartland Bank and its investors, but his illegal schemes also jeopardized confidence in financial institutions.”
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