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Facepalm: Pig butchering schemes often ruin their victims financially, but a recent case caused so much collateral damage that numerous investors lost a lot of money and the government had to seize a bank. Although the person who was scammed into embezzling tens of millions of dollars is prison-bound, it remains unclear when or if the scammers who received the money will be caught.
A federal judge recently sentenced 53-year-old Shan Hanes, former CEO of Heartland Tri-State Bank (HTSB) in Elkhart, Kansas, to 24 years in prison after he illegally wired $47.1 million as part of a cryptocurrency scam, leading to the bank’s failure. Hanes also stole money from a church fund, a local investment club, and a child’s college savings.
The 11 bank transfers, made between May and July 2023, caused bank investors to lose $9 million and forced the FDIC (Federal Deposit Insurance Corporation) to absorb the $47 million loss and seize the bank. Some victims reportedly lost nearly all of their retirement funds. Hanes himself also lost all of the money he embezzled, which remains in the hands of the unidentified scammers.
This is a severe example of “pig butchering,” a confidence scheme where scammers spend a long time building an online relationship with someone – like fattening up a pig – before convincing them to invest in what appears to be a legitimate business opportunity. Perpetrators often target people who are unfamiliar with cryptocurrency.
After securing an initial investment, the scammers begin the “butchering” phase by requesting more money to supposedly “unlock” or “guarantee” the previous investments. This continues until the victim is completely wiped out.
However, the complexity of these criminal operations goes deeper, because the scammers themselves are often victims of human trafficking. According to UN and FBI investigators, young men from around the globe desperate for jobs are frequently tricked into traveling to countries like Thailand, kidnapped by Chinese crime syndicates, and trafficked to massive compounds in neighboring Myanmar.
There, they are locked inside and forced to impersonate people online – often young women – using carefully prepared scripts to trick unsuspecting victims into transferring large sums of money. Those who refuse are beaten.
Chinese authorities have tried to prosecute the ringleaders, but the ongoing civil war in Myanmar has complicated their efforts. Some accuse the country’s military junta of turning a blind eye to the scammers, while opposing rebel forces have since shut down some of the operations.
After falling victim to the scheme, Hanes initially transferred thousands of dollars of his own money before stealing from local organizations and his daughter’s college savings. Eventually, he made 11 wire transfers of millions from HTSB, much of it behind a colleague’s back, even after being warned that he was being scammed.
Hanes continued believing he could recover the money up until his arrest.
