A Kansas pig butchering: CEO who defrauded bank, church, friends gets 24 years
(2024/11/05)
- Reference: 1730838610
- News link: https://www.theregister.co.uk/2024/11/05/fbi_pig_kansas_cryptocurrency/
- Source link:
The FBI has recovered $8 million in funds from a cryptocurrency scam that netted $47 million and devastated the Kansas city of Elkhart.
In August, Shan Hanes, 53, was sentenced to 24 years and five months in prison after he admitted to one count of embezzlement by a bank officer, an action that crashed the Heartland Tri-State Bank, which he headed. Hanes was lured into a so-called pig butchering scam, whereby a cryptocurrency scammer convinces the hog to put more and more money into a fake currency in an effort to reap a profit.
According to [1]court documents [PDF], in December 2022 Hanes was involved in a WhatsApp conversation with an as-yet unidentified person who convinced him to buy into a cryptocurrency scheme. At first, he only used his own funds, but early in 2023, he embezzled funds from the Elkhart Church of Christ and the Santa Fe Investment Club.
[2]
"Ultimately, the lure of easy money quickly results in the complete loss of all funds," the filing said.
[3]
[4]
"It was particularly 'easy money' in this case as the defendant used his position and authority as CEO of Heartland Tri-State Bank to make and authorize the wire transfers or direct other HTSB employees to make the wire transfers on his behalf. It was certainly devastating in this case when the defendant had access to such a large amount of money. It was terribly quick in this case, as the defendant embezzled those funds in a short 8-week period."
[5]US cybercops take on 'pig butchering' org, return $9M in scammed crypto
[6]Feds seize $112m in cryptocurrency linked to 'pig-butchering' finance scams
[7]Beware cool-looking beta crypto-apps. They may be money-stealing fakes
[8]'Pig butchering' romance scam domains seized and slaughtered by the Feds
Hanes had a position of trust in the small city, with a population of around 2000, and used that position to clear transfers to the scammer without serious impediment. When the size of the transfers was questioned by staff, he denied cryptocurrency was involved and persuaded one investor to cover a large transfer from their own personal funds.
In July 2023, the Kansas Office of the State Bank Commissioner moved in and uncovered the fraud after a tip-off from the bank's chief financial officer. The subsequent investigation [9]found [PDF] that the initial fraud went unreported because Hanes was such a trusted member of the small city.
"Interviewees said that bank employees may have been hesitant to question or report the CEO’s activities because he had a dominant role in the bank and was a prominent figure in the community," it states.
[10]
"As previously noted, the CEO had worked at Heartland and its predecessor bank for about 30 years. He was one of the larger shareholders in Heartland’s holding company. Interviewees noted that the CEO also held important leadership roles in the local community."
The audit discovered $47,105,000 was missing, more than the capitalization of the bank. However, the FBI did manage to crack one of the cryptocurrency wallets involved and recovered around $8 million, which is being returned to local investors ahead of any government claims to the money.
“The US Attorney’s Office – District of Kansas thanks the FBI for its diligent investigations that led to the discovery and recovery of over $8 million in stolen funds. 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,” [11]said US Attorney Kate Brubacher. ®
Get our [12]Tech Resources
[1] https://regmedia.co.uk/2024/11/05/hanes.pdf
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/cybercrime&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZyqjlzK4FuHbq-6fef4TBgAAANg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/cybercrime&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZyqjlzK4FuHbq-6fef4TBgAAANg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/cybercrime&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZyqjlzK4FuHbq-6fef4TBgAAANg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2023/11/22/us_cybercops_take_on_pig/
[6] https://www.theregister.com/2023/04/04/fbi_pig_butchering_cryptocurrency/
[7] https://www.theregister.com/2023/08/14/fbi_mobile_beta_testing_apps/
[8] https://www.theregister.com/2022/11/23/pig_butchering_domains_seized/
[9] https://oig.federalreserve.gov/reports/board-material-loss-review-heartland-tri-state-bank-feb2024.pdf
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/cybercrime&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZyqjlzK4FuHbq-6fef4TBgAAANg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.justice.gov/usao-ks/pr/victims-cryptocurrency-scam-awarded-restitution
[12] https://whitepapers.theregister.com/
In August, Shan Hanes, 53, was sentenced to 24 years and five months in prison after he admitted to one count of embezzlement by a bank officer, an action that crashed the Heartland Tri-State Bank, which he headed. Hanes was lured into a so-called pig butchering scam, whereby a cryptocurrency scammer convinces the hog to put more and more money into a fake currency in an effort to reap a profit.
According to [1]court documents [PDF], in December 2022 Hanes was involved in a WhatsApp conversation with an as-yet unidentified person who convinced him to buy into a cryptocurrency scheme. At first, he only used his own funds, but early in 2023, he embezzled funds from the Elkhart Church of Christ and the Santa Fe Investment Club.
[2]
"Ultimately, the lure of easy money quickly results in the complete loss of all funds," the filing said.
[3]
[4]
"It was particularly 'easy money' in this case as the defendant used his position and authority as CEO of Heartland Tri-State Bank to make and authorize the wire transfers or direct other HTSB employees to make the wire transfers on his behalf. It was certainly devastating in this case when the defendant had access to such a large amount of money. It was terribly quick in this case, as the defendant embezzled those funds in a short 8-week period."
[5]US cybercops take on 'pig butchering' org, return $9M in scammed crypto
[6]Feds seize $112m in cryptocurrency linked to 'pig-butchering' finance scams
[7]Beware cool-looking beta crypto-apps. They may be money-stealing fakes
[8]'Pig butchering' romance scam domains seized and slaughtered by the Feds
Hanes had a position of trust in the small city, with a population of around 2000, and used that position to clear transfers to the scammer without serious impediment. When the size of the transfers was questioned by staff, he denied cryptocurrency was involved and persuaded one investor to cover a large transfer from their own personal funds.
In July 2023, the Kansas Office of the State Bank Commissioner moved in and uncovered the fraud after a tip-off from the bank's chief financial officer. The subsequent investigation [9]found [PDF] that the initial fraud went unreported because Hanes was such a trusted member of the small city.
"Interviewees said that bank employees may have been hesitant to question or report the CEO’s activities because he had a dominant role in the bank and was a prominent figure in the community," it states.
[10]
"As previously noted, the CEO had worked at Heartland and its predecessor bank for about 30 years. He was one of the larger shareholders in Heartland’s holding company. Interviewees noted that the CEO also held important leadership roles in the local community."
The audit discovered $47,105,000 was missing, more than the capitalization of the bank. However, the FBI did manage to crack one of the cryptocurrency wallets involved and recovered around $8 million, which is being returned to local investors ahead of any government claims to the money.
“The US Attorney’s Office – District of Kansas thanks the FBI for its diligent investigations that led to the discovery and recovery of over $8 million in stolen funds. 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,” [11]said US Attorney Kate Brubacher. ®
Get our [12]Tech Resources
[1] https://regmedia.co.uk/2024/11/05/hanes.pdf
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/cybercrime&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZyqjlzK4FuHbq-6fef4TBgAAANg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/cybercrime&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZyqjlzK4FuHbq-6fef4TBgAAANg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/cybercrime&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZyqjlzK4FuHbq-6fef4TBgAAANg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2023/11/22/us_cybercops_take_on_pig/
[6] https://www.theregister.com/2023/04/04/fbi_pig_butchering_cryptocurrency/
[7] https://www.theregister.com/2023/08/14/fbi_mobile_beta_testing_apps/
[8] https://www.theregister.com/2022/11/23/pig_butchering_domains_seized/
[9] https://oig.federalreserve.gov/reports/board-material-loss-review-heartland-tri-state-bank-feb2024.pdf
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/cybercrime&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZyqjlzK4FuHbq-6fef4TBgAAANg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.justice.gov/usao-ks/pr/victims-cryptocurrency-scam-awarded-restitution
[12] https://whitepapers.theregister.com/
Use an offline, encrypted wallet
Clausewitz4.0
Use an offline, encrypt by hardware wallet - keeping your cryptocurrency at exchanges, is like handing your money to the bank - sooner or later, the bank will steal from you.
This way, if you die, your money dies with you.
Re: Use an offline, encrypted wallet
Androgynous Cupboard
I'm not sure which article you read, but that is definitely not the advice I distilled from this.
Re: Use an offline, encrypted wallet
Clausewitz4.0
"FBI did manage to crack one of the cryptocurrency wallets involved"
This one?
Doctor Syntax
The real scammer is still at large, it seems.
Dr Dan Holdsworth
Time was when you had to go to financial free fire zones like the game Eve Online to see old-time scams like this being practised out in the wild. I had frankly thought that this sort of scam had died a richly deserved death back in the days of the Big Con trick.
But alas it seems that in the USA at least the banks and bankers are still daft enough to fall for a scam like this, and have too few safeguards in place to deal with dozy management.
Crypto == FREEDUMB!