Former CEO of failed Kansas bank Heartland Tri-State Bank Shan Hanes was federally indicted earlier this month for allegedly embezzling $47.1 million from the bank in the weeks leading up to its collapse.
Hanes was charged Feb. 2 in the U.S. District Court of Kansas. According to a criminal complaint, he embezzled funds from the $139 million bank through 11 wire transfers from May 30-July 7 without having the authority to make the transfers or use bank funds to purchase cryptocurrency. Hanes’ investments later flopped, directly leading to Kansas State Bank Commissioner David Herndon declaring the bank insolvent on July 28.
The FDIC later estimated that the Heartland Tri-State bailout cost its Deposit Insurance Fund $54.2 million. The bank’s four branches reopened three days later as locations of Syracuse, Kan.-based Dream First Bank
Hanes allegedly began investing his own personal funds into crypto in December 2022. He reportedly used embezzled funds from a local church and investment club to invest in crypto early the following year.
Hired by Heartland Tri-State Bank as an ag loan officer in 1993, Hanes was named president/CEO in 2008. Three years later, he brought a local investment group together to acquire the bank from its former holding company. Hanes chaired the Kansas Bankers Association in 2022 and served on the American Bankers Association’s Ag and Rural Banker Committee from 2015-19.
Hanes faces a maximum sentence of 30 years in prison and a $1 million fine.