Federal Reserve bans convicted former CEO from banking

Former Heartland Tri-State Bank CEO Shan Hanes was banned from the banking industry for embezzling $47.1 million from the Elkhart, Kan.-based bank in 2023 in the weeks leading up to the bank's collapse. .The Federal Reserve announced the ban in a Nov. 21 enforcement order. Hanes, 53, is currently serving more than 24 years in prison after pleading guilty in May to one count of embezzlement by a bank officer. Hanes said he fell victim to a crypto "pig butchering" scheme in which the impression was created that more transfers were needed to unfreeze previously deposited funds..Hanes embezzled the funds through 11 wire transfers ranging from $5,000 to $10.3 million from May 30-July 7, 2023. He directed bank employees to transfer the money and lied to them and the bank board about the purpose of the transfers. Hanes' investments later flopped, and he unsuccessfully tried to secure a $69 million loan from another bank. .Kansas State Bank Commissioner David Herndon declared Heartland Tri-State Bank insolvent in late July 2023, and it failed on July 28, 2023. Heartland Tri-State's four branches reopened three days later as locations of Syracuse, Kan.-based Dream First Bank. .The FBI recovered $8 million in funds associated with the fraud. Earlier this month, a federal judge ordered that millions of dollars the government seized during the case be divided among investors who had financial losses.