The unfolding Great Plains saga takes a new turn with the latest claims made by the United States.
The former CEO of Heartland Tri-State Bank has been charged by prosecutors.
The statement is linked with a crypto.
Charges have been filed against the previous chief executive officer of a Kansas bank, accusing them of embezzling a significant amount of $47.1 million. The funds in question were allegedly utilized to acquire cryptocurrency, unraveling the intricate tale of Heartland Tri-State Bank and its eventual demise.
Prosecutors filed a document on Friday in federal court in Wichita, revealing that Shan Hanes, the former head of the bank that ceased operations in July, had also misappropriated funds from a local church.
The closure of the bank had a significant impact on the tightly-knit community of Elkhart, a distant city with a population of around 1,800. Last year, regulators and investigators arrived in the city, causing disruption, and now the residents who had invested in the bank are grappling with substantial financial losses.
The criminal information, commonly referred to as a brief filing, lacks sufficient details. However, Brian Mitchell, a 59-year-old resident entrepreneur, farmer, and bank client, holds the belief that Hanes might have fallen prey to a scam.
The chain of events commenced when Hanes purportedly initiated the purchase of cryptocurrency in 2022 with his personal finances, as stated in the filing on Friday. Prosecutors allege that by early 2023, he had embezzled funds from both the church and an investment club in Elkhart. Then, he resorted to involving the bank, according to their claims.
According to a report by Bloomberg News in September
The alleged scheme started to unravel when Hanes approached Mitchell last summer. Hanes requested a loan of $12 million from Mitchell, stating that he needed the funds to withdraw his investment from the cryptocurrency market. Mitchell claimed that Hanes promised to repay him within 10 days, along with an interest of $1 million.
According to Mitchell’s account, Hanes claimed to have a connection who was assisting him in investing in cryptocurrency. However, there was a problem with wire payments, and Hanes claimed that he needed to contribute more money. Mitchell inquired whether it was the bank’s money, to which Hanes assured him that it was not.
Approximately a week later, Mitchell discovered from a bank employee that Hanes had indeed wired $12 million. Concerned about the bank’s potential exposure, Mitchell approached a member of Heartland’s board and shared details of his meeting with Hanes. Subsequently, a bank representative reported the situation to regulators.
On July 28, the Kansas Office of the State Bank Commissioner declared Heartland insolvent and ordered its closure. David Herndon, the state banking commissioner, stated in August that the bank had fallen victim to a “scam.”
The United States alleges that Hanes embezzled funds through at least 11 wire transfers of bank funds between May and July. The bank ultimately suffered a loss of $47.1 million, leading to its closure and the appointment of the FDIC as the receiver. The FDIC spokesperson declined to comment on the charges, directing Bloomberg News to law enforcement.
“Prior to the revelation, there seemed no avenue for moving forward,” Mitchell expressed.
Unveiling the Exposed Crypto Fraud
As per the filing made by prosecutors, Shan Hanes has been accused of not only embezzling funds from the bank but also allegedly misappropriating money from a nearby church. The report highlights that the criminal information document lacks detailed information, but it suggests that Hanes unlawfully diverted funds from multiple sources, leading to significant financial harm.
However, Brian Mitchell, a resident entrepreneur and customer of the bankrupt financial institution, holds the belief that Hanes could potentially be a target of fraudulent activity.