Federal Reserve Bars CEO Convicted of Embezzlement From Banking Industry

The Federal Reserve Board said Thursday (Nov. 21) that it prohibited Shan Hanes, a former CEO of Heartland Tri-State Bank who was convicted of embezzlement, from future participation in the banking industry.

Hanes embezzled $47.1 million of bank funds, which led to the bank becoming insolvent and failing in July 2023, the Fed said in a press release.

He pleaded guilty to embezzlement by a bank officer and agreed to make restitution of about $60.5 million, according to the Fed’s order of prohibition.

The Department of Justice (DOJ) said in an Aug. 19 press release that Hanes was sentenced to 293 months in prison.

Hanes’ attorney, John Stang, did not immediately reply to PYMNTS’ request for comment on the Thursday announcement from the Fed.

CNBC reported Aug. 21, after Hanes’ sentencing, that Stang wrote in a sentencing submission that Hanes “made some very bad choices” after being caught up in a cryptocurrency scam known as a pig butchering scheme.

“He was the pig that was butchered,” Stang wrote, per the report. “Mr. Hanes’s vulnerability to the Pig Butcher scheme caused him to make some very bad decisions, for which he is truly sorry for causing damage to the bank and loss to the Stockholders.”

In its August press release, the DOJ said that Hanes initiated 11 outgoing wire transfers between May 2023 and July 2023 totaling $47.1 million of Heartland’s funds, that the funds were transferred to cryptocurrency accounts controlled by unidentified third parties, and that the Federal Deposit Insurance Corp. (FDIC) absorbed the $47.1 million loss because Heartland was insured by that agency.

“Hanes’ greed knew no bounds,” U.S. Attorney Kate E. Brubacher said in the release. “He trespassed his professional obligations, his personal relationships and federal law. Not only did Shan Hanes betray Heartland Bank and its investors, but his illegal schemes also jeopardized confidence in financial institutions.”

In a pig butchering scam, bad actors establish connections with victims via wrong-number text messages whose conversations eventually lead to promises of fake investments, which the victim must pour more and more money into before discovering the ruse, PYMNTS reported in March.

Researchers at the University of Texas at Austin found that at least $75 billion in cryptocurrency alone was stolen between 2020 and 2024 due mostly to pig butchering scams.