A courtroom of relief: FBI recovers funds for victims of scammed banker

WICHITA, KANSAS -- Sobs of alleviation collapsed retired successful a national courtroom successful Kansas connected Monday arsenic dozens of group whose life savings had been embezzled by a slope CEO learned that national rule enforcement had recovered their money.

"I conscionable can’t picture nan weight lifted disconnected of us,” said Bart Camilli, 70, who pinch his woman Cleo had conscionable learned they’d retrieve adjacent to $450,000 — money Bart began redeeming astatine 18 erstwhile he bought his first individual status account. “It’s life-changing.”

In August, erstwhile Kansas slope CEO Shan Hanes was sentenced to 24 years aft stealing $47 cardinal from customer accounts and wiring nan money to cryptocurrency accounts tally by scammers. Prosecutors said Hanes besides stole $40,000 from his church, $10,000 from an finance nine and $60,000 from his daughter’s assemblage money and mislaid $1.1 cardinal of his ain successful nan scheme. Deposits were “jettisoned into nan ether,” said charismatic Aaron Smith.

Hanes' Heartland Tri-State Bank, drained of cash, was unopen down by national regulators and sold to different financial institution. Customers’ savings and checking accounts amounting to $47.1 cardinal were insured by nan Federal Deposit Insurance Corp., which paid disconnected their losses.

But location were still 30 shareholders of nan community-owned agrarian slope Hanes helped recovered — including his adjacent family friends and neighbors — who thought they mislaid $8.3 cardinal successful investments: well-planned retirements were upended, costs for semipermanent eldercare gone, acquisition costs and bequests for children and grandchildren zeroed out.

On Monday nan shareholders stood to cheer national Judge John W. Broomes successful Wichita aft he told them, 1 astatine a time, that they’d beryllium paid backmost successful full. The FBI recovered nan costs from a cryptocurrency relationship held by Tether Ltd. successful nan Cayman Islands.

During an earlier sentencing hearing, these victims had called Hanes a “deceitful cheat and a liar,” and “pure evil.”

Margaret Grice came to tribunal Monday figuring she’d get $1,000 back. Instead, she learned she’d beryllium recovering almost $250,000, her full 401(k).

“I’m conscionable really thrilled,” she said. “I tin breathe.”

Prosecutors said Hanes, who was nan CEO of Heartland Tri-State Bank successful Elkhart, Kansas, mislaid nan money successful a scam referred to arsenic “pig butchering,” aliases nan measurement pigs are fattened earlier slaughter. In nan scam, a 3rd statement gains a victims' spot and, complete time, convinces them to put each of their money into cryptocurrency, which instantly disappears. U.S. and U.N. officials opportunity these schemes are proliferating, pinch scammers mostly successful Southeast Asia progressively taking advantage of Americans.

Hanes started buying what he thought was $5,000 successful cryptocurrency successful precocious 2022, communicating pinch personification who had reached retired connected WhatsApp, according to tribunal records. A fewer months later he transferred complete his religion and finance nine funds. Records show nan scam accelerated successful nan summertime of 2023, erstwhile Hanes wired $47.1 cardinal retired of customer accounts successful 11 ligament transfers complete conscionable 8 weeks. Each transfer, he thought, was basal to extremity nan finance and rate out, tribunal records said. He watched, connected a clone website, arsenic nan money appeared to turn to much than $200 million.

“He was to return immoderate of nan money, and nan remainder of nan money was expected to spell backmost to nan bank,” his lawyer John Stang explained. “Now it's fiction, it didn't exist. We each cognize that now ... It grounded large time.”

Hanes, who was not successful tribunal Monday, apologized astatine an earlier sentencing hearing.

“From nan deepest extent of my soul, I had nary volition of ever causing nan harm that I did," he said. ”I’ll everlastingly struggle to understand really I was duped and really what I thought was conscionable getting nan money backmost was making it worse."

Prosecutors said Hanes wasn’t conscionable nan unfortunate of a scam, he crossed a statement erstwhile he began taking customers' money and violating banking regulations. He pleaded blameworthy to embezzlement by a slope serviceman successful May.

His salient opinionated successful his hometown of 2,000 made it easier for him to get distant pinch it, a Federal Reserve System investigation found; he had been connected nan schoolhouse board, volunteered arsenic a aquatics meet official, and served connected nan Kansas Bankers Association.

He besides was a banking leader beyond his agrarian community. In caller years, he testified to Congressional committees astir nan value of section banks successful farming communities, and he served arsenic a head for nan American Bankers Association, which represents almost each banking assets successful nan U.S.

On Monday, prosecutors said nan FDIC wanted to beryllium paid backmost for nan security claims it reimbursed to slope customers. But Judge Broomes said nan economical circumstances of shareholders “who became insolvent because of a fraud scheme” justified paying them backmost first, earlier nan FDIC recovers anything.

Hanes, 53, whitethorn beryllium successful his precocious 70s erstwhile he is released and is improbable to beryllium capable to salary nan FDIC nan $47.1 cardinal still owed.

In a tribunal filing, Hanes and his lawyer tried to explicate what had happened.

“Mr. Hanes made immoderate very bad choices aft being caught up successful an highly well-run cryptocurrency scam,” they said. “He was nan pig that was butchered.”