Kansas Crypto Scam News: $8M Recovered for Victims by FBI

Justice Served: FBI Recovers $8 Million for Bank Scam Victims

In a major recovery effort, the FBI has secured $8.3 million for victims affected by a crypto scheme led by Shan Hanes, former CEO of Heartland Tri-State Bank in Kansas. Hanes was sentenced to over 24 years in prison for orchestrating an embezzlement scheme that drained $47.1 million from customer accounts, causing the bank’s collapse.

Details of the Scheme

According to court records, the fraud began in the summer of 2023, when Hanes initiated 11 wire transfers, withdrawing $47.1 million from bank accounts over eight weeks. Initially, he invested $5,000 in cryptocurrency based on advice from a contact he met on WhatsApp. 

This marked the start of a scam known as "pig butchering," where victims are convinced to pour money into crypto assets, only to have the funds disappear.

Recovery Efforts

The funds recovered by the FBI came from a cryptocurrency account in the Cayman Islands held by Tether. The $8.3 million in restitution, awarded to 30 shareholders, includes community members who had trusted Hanes. While the Federal Deposit Insurance Corporation (FDIC) insured the bank's total losses, covering much of the damage, the fraud caused a $9 million shortfall for investors.

Sentencing and Statements

Following Hanes’ conviction, U.S. Attorney Kate E. Brubacher stated, "Through Hanes’ conviction and prison sentence, the Department of Justice obtained justice for the victims, and now, with this court order, those victims will receive some financial relief."

Hanes was sentenced in August 2024 to 293 months (over 24 years) in prison, with the court’s decision providing some closure for victims.