Former CEO of failed Kansas bank banned from banking

Former executive found guilty of embezzling millions from his failed community bank he was prohibited from engaging in banking activities.

Earlier this week, the Federal Reserve banned Shan Hanesformer CEO Heartland Tri-State Bank in Elkhart, Kansas, from working in a bank, being a member of the bank’s board, or working for a company affiliated with the bank.

The action comes after Haynes pleaded guilty to stealing approximately $47 million in bank funds and transferring them to his own crypto wallet, then transferring them to multiple unidentified third parties who turned out to be scammers. The theft contributed to the bank’s deterioration and eventual bankruptcy in July 2023.

After bankruptcy, $139 million of Heartland Tri-State’s assets were absorbed by Syracuse, Kansas-based Dream First Bank, but the episodes still resulted in losses to the Federal Deposit Insurance Fund.

As a result of the bankruptcy, DIF had to absorb losses of $47 million to restore deposits. The bank’s shareholders lost an additional $9 million. As part of the criminal settlement, Haynes agreed to pay $60.5 million in damages.

His actions also earned him a significant prison sentence. In August, he was sentenced to 293 months (almost 24.5 years) in prison after pleading guilty to one count of embezzlement by a bank employee.

The Justice Department said Haynes was the victim of a “pig slaughter” scam in which the attackers befriended someone and convinced him to funnel money into fictitious cryptocurrency investments. Such schemes usually involve the scammer displaying false earnings, making it appear that the investment is legitimate and profitable, in order to entice the victim to contribute more.

“Mr. Haynes, as CEO of Heartland Tri-State Bank, enjoyed the trust and confidence of the Elkhart, Kansas community, but he violated that trust,” said Stephen Cyrus, Special Agent in Charge of the FBI’s Kansas City Field Office. in a written statement earlier this year. “He tried to gain financial benefit by embezzling bank funds. His get-rich-quick idea was actually a pig slaughter scheme. His involvement in this scheme ultimately led to the bank’s collapse. His job, the bank’s job, was to protect its customers and identify fraudulent schemes, not to participate in them.”