Sobs of relief broke out in a federal courtroom in Kansas as dozens of people whose life savings had been embezzled by a bank CEO learned that federal law enforcement had recovered their money. Former Kansas bank CEO Shan Hanes was sentenced to 24 years after stealing $47 million from customer accounts and wiring the money to cryptocurrency accounts run by scammers. Hanes also stole money from his church, an investment club, his daughter’s college fund, and lost $1.1 million of his own in the scheme. Customers’ savings and checking accounts were insured by the FDIC, which paid off their losses.
Hanes’ bank, drained of cash, was shut down by federal regulators and sold to another financial institution. However, there were still 30 shareholders who lost $8.3 million in investments, causing well-planned retirements to be upended and education funds to be zeroed out. On Monday, the shareholders were informed by a federal judge that they would be paid back in full. The FBI recovered the funds from a cryptocurrency account held by Tether Ltd. in the Cayman Islands. Victims of the scam had previously called Hanes a “deceitful cheat and a liar,” and “pure evil.”
Margaret Grice, one of the victims, thought she would only receive $1,000 back but instead learned she would be recovering almost $250,000, her entire 401(k). Prosecutors revealed that Hanes lost the money in a scam referred to as “pig butchering,” where a third party gains the victim’s trust and convinces them to invest all of their money into cryptocurrency, which then disappears. Hanes started buying cryptocurrency in late 2022, thinking it was $5,000, and later transferred over his church and investment club funds. The scam accelerated in the summer of 2023 when he wired $47.1 million out of customer accounts.
Hanes apologized at an earlier sentencing hearing, expressing that he had no intention of causing harm and struggled to understand how he was duped. He pleaded guilty to embezzlement by a bank officer in May. His prominent standing in his small community made it easier for him to get away with the scam. Prosecutors noted that he was also a banking leader beyond his rural community, serving on the Kansas Bankers Association and testifying before Congressional committees. Judge Broomes ruled that the shareholders should be paid back first, before the FDIC recovers anything. Hanes, who is 53, may be in his late 70s when he is released and is unlikely to be able to pay the FDIC the $47.1 million still owed.
In a court filing, Hanes and his attorney explained his involvement in the scam as making bad choices after getting caught up in an elaborate cryptocurrency scheme. They described him as the “pig that was butchered.” The recovery of funds brought relief to the victims who had lost their life savings and investments. The case sheds light on the growing trend of cryptocurrency scams and the devastating impact they can have on individuals and communities. Despite the betrayal by Hanes, the recovery of the stolen funds provides a sense of closure and justice for those affected by his fraudulent actions.
