The former CEO of a small Kansas bank has been sentenced to more than 24 years in prison for stealing a massive $47 million from which he never profited, according to court documents.
Federal prosecutors say former Heartland Tri-State Bank CEO Shan Haines was tricked by con artists in a “pig slaughter” scheme, conning him into sending millions of dollars via wire transfer with the promise of unlocking profits on his cryptocurrency investments.
The 53-year-old orchestrated a series of wire fraud schemes over an eight-year period that led to the collapse of Elkhart Bank and its takeover by the FDIC, making it one of just five U.S. banks to fail in 2023. According to a CNBC report.
Residents of the small town of 2,000 in southwest Kansas said Haines seemed like a “good guy.”
Haynes helped fellow community members and preached at local churches.
He was active in the banking industry, serving on the boards of directors of the American Bankers Association and the Kansas Bankers Association, and testifying before Congress on community banking.
But court records show Haynes had embezzled money from her church, a local investment club and savings accounts meant for her three daughters’ college education, all of which was lost to the con artists.
According to reports, U.S. District Judge John Brooms on Monday sentenced Haynes to 24 years in prison, 29 months longer than prosecutors had sought, after he pleaded guilty in May to one count of embezzlement by a bank employee.
Despite shuttering his bank and wiping out shareholders’ savings, Haines showed little to no remorse during his hearings, area residents told CNBC.
Brian Mitchell, a longtime neighbor of Haines’, said at the sentencing that he called the former CEO’s actions “pure evil.”
Mitchell, whose company owns a chain of farms and movie theaters that does business with Heartland Bank, told CNBC that about 30 of the bank’s shareholders attended Haynes’ sentencing after the bank’s collapse caused its stock price to plummet.
Some residents “have lost 70 to 80 percent of their retirement benefits,” he told CNBC.
One local woman is “struggling to get her 93-year-old mother into a care home,” while another can no longer afford to retire, he said.
Mitchell himself was not a shareholder in the bank, but he belonged to an investment club that Haynes had bought.
“In the courtroom, Shan faced the judge but only briefly looked over his left shoulder, avoided eye contact and simply said, ‘I’m sorry,'” Mitchell said.
But when Judge Blooms imposed the 24-year sentence and ordered Mr Haynes to be detained immediately, Mr Mitchell said Mr Haynes had a look of “complete shock”.
According to prosecutors, in late 2022, Haynes first used his own funds to become the “pig” in a “pig slaughter scheme,” in which scammers convince victims to invest in legitimate cryptocurrencies and then keep the money for themselves.
Prosecutors said the man initiated the transaction after contacting the fraudsters on WhatsApp, whose identities have not yet been revealed.
But Haines soon began embezzling money to raise funds for a cryptocurrency business.
According to prosecution and defense filings reported by CNBC, in early 2023, the suspect stole $40,000 from the Elkhart Church of Christ and $10,000 from the Santa Fe Investment Club.
The attorney said the suspect stole $60,000 from his daughter’s college account and $1 million worth of stock from Elkhart Financial Corporation.
Then he headed to work.
In May 2023, he wired $5,000 from Heartland Tri-State Bank to an account controlled by the scammers, according to the report.
Two weeks later, he upped his bet, transferring $1.5 million from the bank, and the next day, he transferred another $1.5 million, according to court documents.
Three days later, he wired two more payments totaling $6.7 million, then $10 million two weeks later and $3.3 million a few days later, according to court documents.
Prosecutors said he manipulated bank employees into completing the wire transfers.
A report by the Federal Reserve’s Office of Inspector General said Heartland Bank employees approved the transfers in violation of the bank’s own policies.
The report said bankers were likely hesitant to ask questions because of Haines’ role as CEO.
Haines fell into a pattern of wire transfers after the scammers told her each investment required a new transaction to withdraw profits from the previous one. Haines uncovered the pattern when she made a panicked call to a neighbor just before 8 a.m. on July 5, 2023, Mitchell told CNBC.
Mitchell said Haynes told him “you’re the only one who can help me,” and as a prostate cancer survivor decades ago, he assumed his friend was suffering from the same disease.
Mr Mitchell met with Mr Haynes that morning before the bank opened.
“The first thing he said was, ‘Brian, I need you to borrow $12 million in 10 days, and I’ll give you $1 million as a thank you for lending it to me,'” Mitchell told CNBC. “I was sitting there wondering if I was in a bank in Elkhart, Kansas, or in the back alleys of Chicago with the loan sharks.”
When Mitchell asked Haines why he needed the money, Haines “pulled out his phone, pretended to log in and showed me accounts that had $40 million, $42 million in them,” Mitchell told CNBC.
Mitchell said Haynes told him the millions were in cryptocurrency and that he needed $12 million to verify the funds.
Mitchell said Haynes told him he had spoken with a banker in Denver named “Jim” and “another guy in Oklahoma” who had made a lot of money investing in cryptocurrency stored in Coinbase accounts.
“I told him, ‘You’re being scammed. You’re being scammed,'” Mitchell said.
“I stopped him and said, ‘Is that the bank’s money you’re playing with?’ And he said, ‘No, Brian.'”
Mitchell said Haynes told him he would “activate” the funds, which he transferred to a cryptocurrency account in Hong Kong for $12 million.
“I said, ‘Get on a plane, go to Hong Kong, hire a translator and get a bank check for the funds that are supposedly being held there,'” Mitchell told CNBC.
“And I said, ‘I’m not giving you any money.’ I said, ‘You’re being scammed, walk away.’
But Haynes didn’t get away with it: He had the banker transfer another $8 million that day and $4.4 million two days later, prosecutors said.
Mitchell said he was unaware of the earlier wire transfers but was concerned that Haynes would transfer the $12 million he had mentioned that morning.
The following week, a “stressed” bank employee told Mitchell that Haynes had wired the money from the bank, he said.
Mitchell said he spoke with the board members and their lawyers that night.
Within days, Haines was fired, and two weeks later the bank was closed and taken over by the FDIC.
According to CNBC, Dream First Bank of Syracuse, Kansas, accepted the deposits so depositors didn’t lose any money, but shareholders lost all their money.
The previous year, the bank had total assets of about $140 million and total deposits of $130 million, according to the report.
Haynes was indicted in February of last year and was under house arrest until his sentencing this week.
Mitchell said he spoke with his neighbor while mowing his yard, but Haynes still believed there was a way to get his money back.
“He said, ‘If only I had two more months, I could get my money back,'” Mitchell told CNBC.
Before passing sentence, Judge Blooms asked the audience to “forgive” Shan, according to Mitchell.
Mitchell said Blooms told him: “I know he hurt you, but I want you to move on and find joy in life. Let’s punish him.”
“He was a pig to be slaughtered,” wrote Haines’ lawyer, John Stang. “Haines was vulnerable to the pig slaughter scheme and made some very bad decisions that he sincerely regrets, costing the bank and causing losses to his shareholders.”
Kate Burbacher, U.S. Attorney for the District of Kansas It said in a statement “Haynes’ greed knew no bounds. He violated professional duties, personal relationships and federal law.”
