A courtroom relief: the FBI returned funds to victims of scammed bankers

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WICHITA, KANSAS (AP) – Sobs of relief broke out in federal court in Kansas on Monday.

“I just can’t describe the weight lifted from us,” said Bart Camilli, 70, who with his wife Cleo already know that they will recover almost $ 450,000 – money Bart started saving when he was 18 years old when he bought his first individual pension. account. “It’s life-changing.”

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In August, former Kansas bank CEO Shan Hanes was sentenced to 24 years after stealing $47 million from customer accounts and transferring the money to cryptocurrency accounts managed by scammers. Prosecutors said Hanes also stole $40,000 from his church, $10,000 from an investment club and $60,000 from his daughter’s college fund and lost $1.1 million himself in the scheme. The deposits were “jettisoned into the ether,” prosecutor Aaron Smith said.

Heartland Hanes Tri-State Bank, running out of cash, was closed by federal regulators and sold to another financial institution. Customers’ savings and checking accounts totaling $47.1 million were insured by the Federal Deposit Insurance Corp., which paid the loss.

But there are still 30 shareholders of the village bank helped by Hanes – including close family friends and neighbors – who think they’ve lost $8.3 million in investments: pensions they’d planned were wiped out, funds for long-term care for the elderly , education. funds and inheritance for children and grandchildren zeroed out.

On Monday, shareholders stood to cheer federal Judge John W. Broomes in Wichita after he told them, one by one, that they would be paid back. The FBI recovered funds from a cryptocurrency account held by Tether Ltd in the Cayman Islands.

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During the previous sentencing hearing, the victims called Hanes a “liar and liar,” and “pure evil.”

Margaret Grice appeared in court Monday because she will get $1,000 back. However, he found out that he would return almost $250,000, all of it to his 401(k).

“I’m just really happy,” he said. “I can breathe.”

Prosecutors said Hanes, who was CEO of Heartland Tri-State Bank in Elkhart, Kansas, lost the money in a so-called “hog killer” scam, or the way pigs are fattened before slaughter. In the scam, a third party gains the trust of the victims and, over time, convinces them to invest all their money into cryptocurrency, which is immediately lost. US and UN officials say the scheme is on the rise, with scammers mostly in Southeast Asia increasingly taking advantage of Americans.

Hanes began buying what he estimated was $5,000 in cryptocurrency in late 2022, communicating with people who had reached out to WhatsApp, according to court records. A few months later he was transferred through the church and an investment club fund. Records show the fraud peaked in the summer of 2023, when Hanes sent $47.1 million from customer accounts in 11 wire transfers over eight weeks. Each transfer, he thought, was necessary to end his investment and cash, court records said. He watched, on a fake website, as the money grew to more than $200 million.

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“They got to take some of the money, and the rest of the money was supposed to go back to the bank,” said attorney John Stang. “Now it’s fiction, it doesn’t exist. We all know it now… It failed miserably.

Hanes, who was not in court Monday, apologized at an earlier sentencing hearing.

“From the deepest depths of my soul, I had no intention of causing the harm that I did,” he said. “I will forever struggle to understand how I was cheated and how I thought I was just getting my money back.”

Prosecutors say Hanes wasn’t just a victim of fraud, he crossed the line when he started taking customers’ money and violated banking regulations. He pleaded guilty to embezzlement by bank officials in May.

His prominent position in his hometown of 2,000 made it easier for him, a Federal Reserve System investigation found; he has been on the school board, volunteered as an official swim meet, and served on the Kansas Bankers Association.

He is also a leader in banking beyond rural communities. In recent years, he has testified before Congressional committees about the importance of local banks in farming communities, and he is a director of the American Bankers Association, which represents almost all banking assets in the US.

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On Monday, prosecutors said the FDIC wants to be reimbursed for insurance claims it reimbursed for bank customers. But Judge Broomes said the economic condition of the shareholders “who were bankrupted by the fraudulent scheme” justified repayment, before the FDIC recovered anything.

Hanes, 53, may have been in his late 70s when he was released and is unlikely to be able to pay off the $47.1 million he still owes the FDIC.

In court, Hanes and his attorney tried to explain what happened.

“Mr. Hanes made some bad choices after being caught in a very good cryptocurrency scam,” he said. “He’s a pig to be slaughtered.”

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