Heartland Tri-State Bank served as the financial cornerstone of Elkhart, Kansas, a community of 1,900 where trust was paramount. This trust crumbled in July 2023 when bank president Shan Hanes directed $47.1 million into cryptocurrency, only to see it disappear into overseas wallets, leading to the bank’s collapse and leaving residents in financial despair.
State and federal investigators have indicated that Hanes became a victim of an intricate cryptocurrency scam known as ‘pig butchering,’ where individuals are manipulated into investing in fictitious schemes until they exhaust their funds. This was not merely Hanes’ personal downfall; it obliterated the financial security of an entire town.
Bank President’s Quest for Crypto Wealth
Hanes, a respected businessman and part-time preacher, had presided over Heartland since 2008. The bank was community-owned, supported by around 35 local investors, including Hanes and Jim Tucker, whose father contributed to the bank’s founding in 1984. Control of Heartland lay firmly within the town, and any profits remained local.
However, this dynamic changed in December 2022 when a woman, identifying herself as Bella, reached out to Hanes on social media, claiming that her aunt operated a cryptocurrency investment firm in Australia. She persuaded him to begin investing. By May 2023, Hanes depleted his personal savings and even withdrew $60,000 from his daughter’s college fund, but that wasn’t enough.
The situation worsened when Hanes began misappropriating funds from the bank. On May 11, 2023, he transferred $3 million from Heartland’s accounts to Kraken, a U.S.-based cryptocurrency exchange. By June 2023, he channeled a staggering $31 million into his cryptocurrency ventures. He misled colleagues by asserting these funds were for a client, despite the transfers lacking oversight or documentation.
When a concerned investor alerted Tucker, he confronted Hanes at a July board meeting. Hanes, displaying an unusual bravado, insisted he had a plan and requested an $18 million loan to “recover the money.”
“Shan, I don’t even know who you are right now,” Tucker expressed incredulously. “I don’t believe anything you’ve said.”
But by then, it was already too late.
Heartland Shut Down, FBI Enters the Scene
News of the scandal spread quickly. Local businessman Brian Mitchell was among the first outside the bank to learn of Hanes’ predicament. Hanes had solicited him for $12 million to help unfreeze his reported $40 million in crypto assets on an offshore trading platform. Mitchell declined.
“Shan, I think you’re in a scam,” he cautioned. But Hanes was not receptive, wiring another $8 million the same day.
By the end of July 2023, Kansas regulators entered Heartland’s premises. The bank was deemed insolvent. On July 28, Kansas Banking Commissioner David Herndon stood in the lobby and informed employees it was over, stating a new bank, Dream First, would assume control of accounts the following Monday. Although depositors were protected, investors lost everything, watching their bank shares plummet in value. Retirement funds, life savings, and generational wealth—vanished.
On the same day, federal agents dismantled computers, cut security cameras, and loaded materials into unmarked black SUVs. Officials informed shareholders that the money had evaporated into untraceable cryptocurrency wallets. The collapse rocked Elkhart. Employees wept at their desks as the bank was shut down. Tucker, whose father had devoted his life to building the bank, had to sign the final documents.
“Just watching it melt,” Tucker later recounted. “Burn to the ground, right there before our eyes.”
Hanes Receives 24-Year Prison Sentence
The case progressed swiftly. Hanes pleaded guilty to embezzlement, receiving his sentence in August 2024. Former shareholders of Heartland filled the gallery at the federal courthouse in Wichita, awaiting the judge’s ruling.
Hanes’ lawyer, John Stang, claimed his client had been manipulated. “Why did this happen?” he questioned rhetorically. “Was it greed? Naivety? Apparently, he wasn’t intelligent enough.”
Taking the stand, Hanes, his voice trembling, stated, “I’ll forever struggle understanding how I was duped,” even recounting a trip to Australia in January 2024, still hopeful of recovering the lost funds, only to find no one at the airport to meet him.
Judge John W. Broomes expressed no sympathy. “Forgive this man,” he advised the shareholders. “Leave retribution to me. I will ensure justice is served.”
He sentenced Hanes to 24 years and 5 months in prison—longer than what prosecutors had sought. A hush of affirmation passed through the courtroom as Hanes’ family wept during his arrest.
One shareholder stood up to declare, “If he is released the day he dies, that will be one day too early.”
Elkhart in Shock, Community Trust Destroyed
Months later, investigators managed to recover $8 million concealed in Tether, a widely used stablecoin. Though a mere fraction of the pilfered funds, it allowed partial reimbursement to investors.
When Tucker learned of the recovery, he rushed to his father’s hospital bedside. The elder man, too frail to say much, merely blinked in acknowledgment. “Oh, my,” he whispered softly, passing away a week later.
Elkhart remains affected. The Heartland building still stands, though its sign has been removed. The new owner has yet to replace it, leaving an empty brick shell—a testament to the town’s losses.
Though Hanes was a victim of cryptocurrency fraud, it was his neighbors who paid the price. Many lost everything.
Tucker continues to pass by the bank, constantly reminded of the events.
“The trust that was broken,” he reflects, his voice fading. “That one stings.”
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