One-time executive found guilty of embezzling millions community bank that has since failed Banking transactions were prohibited.

The Federal Reserve banned it earlier this week Shan Hanesformer CEO Heartland Tri-State Bank Working for a bank, serving on a bank board, or working for a bank-affiliated company in Elkhart, Kansas.

The action comes after Hanes pleaded guilty to embezzling approximately $47 million in bank funds and transferring them to his own crypto wallet before transferring them to multiple unidentified third parties who proved to be fraudulent. The theft contributed to the bank’s deterioration and eventual failure in July 2023.

Following the failure, $139 million of Heartland Tri-State’s assets were absorbed by Syracuse, Kansas-based Dream First Bank, but these events still resulted in a loss to the federal Deposit Insurance Fund.

As a result of the failure, DIF was forced to absorb a $47 million loss to make depositors whole. Bank shareholders lost an additional $9 million. As part of the criminal settlement, Hanes agreed to pay $60.5 million in restitution.

His actions also resulted in significant prison time. In August, he was sentenced to 293 months (about 24.5 years) in prison after pleading guilty to embezzlement by a bank teller.

The Justice Department said Hanes was the victim of a “pork butchering” scam in which he befriended one of the bad actors and convinced them to funnel money into fake crypto investments. Such schemes typically involve the fraudster showing fake earnings that make an investment appear legitimate and profitable to encourage the target to contribute more.

“Mr. Hanes had the trust and confidence of the Elkhart, KS community as CEO of Heartland Tri-State Bank, but he violated that trust,” said Stephen Cyrus, special agent in charge of the FBI’s Kansas City field office. He made a written statement earlier this year. “He attempted to gain financial advantage by embezzling funds from the bank. His get-rich-quick idea was in reality a pig slaughter scheme. His involvement in the scheme ultimately led to the bank’s collapse. His job, the bank’s job, is to protect its customers and to detect and participate in fraudulent schemes.” not.”