CEO Of Local Banks In The US Threatened With 30 Years In Prison After Being Caught Committing Pig Butchering Crypto Fraud

Pig Butchering's crypto fraud scheme occurred in the US. (Photo; Doc. Coin Aquarium)

JAKARTA - Shan Hanes, former CEO of Bank Heartland Tri-State, a local bank in Elkhart, Kansas, USA, had to face charges of misappropriation of a $47 million bank to buy crypto assets. Hanes is suspected of being involved in a fraudulent scheme called "Pig Butchering", in which he was persuaded to invest bank money into a fake crypto project. As a result, the bank went bankrupt and closed by regulators in July 2023.

Hanes, who has worked at the bank for three decades and has been CEO since 2008, claims to be a crypto investor since December 2022. Initially, he used his personal money to buy crypto, but then he started using funds from other entities, such as local churches and investment clubs. In May 2023, he started using bank funds to buy crypto, without authorization from the board of directors or shareholders.

According to court documents, Hanes made at least 11 wire transfers from banks to crypto exchanges between May and July 2023, totaling 47 million US dollars. Hanes claims that he invested in a crypto project that promises huge profits in no time, but it turns out the project is fake and the money cannot be withdrawn.

The fraudulent scheme that ensnared Hanes was called "Pig Butchering", defined by the Financial Crimes Enforcement Network (FinCEN) as a scheme in which "victims invest in virtual currency investment opportunities that should have been legal before they were persuaded to lose their money."

"Penipu menyebut korban sebagai 'bab,' dan mungkin menggunakan identitas fiktif, mempura-pura [menjalin] hubungan potensial, dan jalur cerita yang rumit untuk'mengenakkan' korban agar percaya berada bahwa mereka berada dalam kemitraan yang berpercaya sebelum membuat korban dari aset mereka - 'penyelimbelan,'" bunyi pernyataan dari FinCEN.

Hanes is known to have been involved in this fraudulent scheme after he asked for a loan of USD 12 million (IDR 189 billion) to one of the wealthy bank customers, a local farmer, to help solve the wire transfer problem. The customer refused to lend and reported this to members of the bank board. Then, the Kansas regulator checked the bank and stated that the bank was not solvent.

As a result of this scandal, bank Heartland Tri-State Bank, which has been operating since 1905 and serves the local community by providing loans to farmers and entrepreneurs, must be closed. Bank customers can still get their money back through Federal Deposit Insurance Corp. (FDIC), which guarantees deposits of up to 250,000 US dollars (Rp 3.9 billion) per account. However, bank shareholders, including Hanes and his family, will most likely lose their investment.

Hanes, who has resigned from his post as CEO and member of the school council and the Kansas banking association, is now facing charges of bank misappropriation and a maximum penalty of 30 years in prison. He will serve his first trial in federal court totaling Kansas, on February 28, 2024.