Millions of funds stolen from Heartland Tri-State Bank in Kansas have been returned to bank customers more than a year after the bank was closed down.
According to the U.S. Department of Justice, during a restitution hearing a federal judge ordered that millions of dollars seized by the government should be divided among victims who suffered a financial loss. Per an Associated Press report, “sobs of relief broke out in the courtroom,” Monday when dozens of victims realized they would get their life savings back.
Former Bank CEO Shane Hanes, 53, was already sentenced to 293 months in prison for the scheme in August. He pleaded guilty to one count of embezzlement by a bank officer.
“The U.S. 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,” said U.S.
Attorney Kate E. Brubacher, according to the DOJ.
Heartland Tri-State Bank was closed by the Kansas Office of the State Bank Commissioner in July 2023, according to the Federal Deposit Insurance Corporation, which noted that no advance notice is given to the public when a bank fails. A $47.1 million cryptocurrency scheme caused the bank to fail, the DOJ explained.
It said Hanes initiated wire transfers of bank funds to a cryptocurrency wallet belonging to third parties. Bank investors eventually lost approximately $9 million and the bank collapsed under the scheme.
A Board of Governors of the Federal Reserve System report said that this type of scheme is known as a “pig butchering” scam. The Federal Bureau of Investigation describes these scams as cryptocurrency investment fraud.
“Significant internal control breakdowns and the influence of the CEO as a dominant management official created an opportunity for the series of apparently fraudulent wire transfers to be initiated and processed,” said the Board of Governors of the Federal Reserve System report. “These wire transfers significantly impaired Heartland’s capital and liquidity, causing the bank to become insolvent.”
Last July, the bank’s chief financial officer contacted authorities about the CEO’s actions and the bank’s deterioration, the report added. An examination was conducted and the bank’s closure followed soon after.
Bart Camilli and his wife Cleo lost close to $450,000 due to the scheme, said the AP. Now 70, Camilli began saving when he was only 18 years old.
“I just can’t describe the weight lifted off of us,” said Camilli after learning that they would get their savings back. “It’s life-changing.”