Former Kansas Bank CEO Gets 24 Years in Jail After Falling for ‘Pig Butchering’ Scam

U.S. authorities have sentenced 53-year-old Shan Hanes to 293 months of prison for using his position as CEO of Heartland Tri-State Bank to steal $47 million, which eventually led to the demise of the institution.

But Hayes, who received 24 years of jail time for initiating 11 outgoing wire transfers between May 2023 and July 2023, fell victim to a common cryptocurrency scam dubbed “pig butchering.”

His activities caused Heartland Tri-State Bank to fail, bank investors to lose $9 million, and the FDIC to absorb the total $47 million loss.

“Hanes’ greed knew no bounds. He trespassed his professional obligations, his personal relationships, and federal law. Not only did Shan Hanes betray Heartland Bank and its investors, but his illegal schemes also jeopardized confidence in financial institutions,” said U.S. Attorney Kate E. Brubacher.

‘Pig Butchering’

Pig butchering is a common scam that mostly takes place in Southeast Asia and originates from the practice of fattening a pig before slaughter.

What usually happens is that fraudsters strike up a seemingly innocent connection on social media or dating apps, where they befriend (or romantically engage with) the victim. Many times the profiles will depict a handsome man or beautiful woman.

After building a rapport with their victims – the “fattening” phase – scammers will gradually introduce the idea of investing, usually in cryptocurrencies, often claiming that the perpetrators have made large gains.

The scammers will then manipulate their targets into depositing large sums of money in investment platforms that are controlled by the criminals. Once they can’t or won’t deposit more, victims lose access to their original funds, wherein they are informed the only way to retrieve those funds is by depositing more money. 

Naturally, any additional deposits are also stolen.

The amount of funds lost to pig butchering schemes varies. A group of researchers from the University of Texas published an investigation into the Economics of Pig Butchering, which claims victims have lost up to $75 billion since January 2020. According to the Global Anti-Scam Organization, at least 1,838 people in 46 countries have lost an average of $169,000 each to pig butchering since June 2021.

An in-depth report by ProPublica claimed that a lot of victims are stunned by the effectiveness of the trickery. “I have to say, it’s brilliant,” said one Silicon Valley CEO who allegedly lost $800,000 and asked not to be named out of embarrassment.

Accompanying pig butchering are elements of human trafficking.

ProPublica described how there are two victims in classic pig butchering schemes. Criminals lure unsuspecting job seekers into forced labor in countries like Cambodia. Upon arrival in concentration-like camps, victims are usually given one of three tasks: sex work, hard labor, or cyber scams like pig butchering.

A 2024 report from Chainalysis confirms the findings and calls the conditions the paradoxical victim-perpetrator faces “horrible,” with 12-hour days. If they don’t meet their quotas on contacting potential victims, gangs beat them, torture them, and even withhold food.

Rise In ‘Romance Scams’

Pig butchering, also known as romance scams, doubled from 2022 to 2023, according to a 2024 report from Chainalysis.

Activity linked to this type of scam soared 85 times from 2020 to 2023, with these types of schemes having the worst financial impact on victims. The average payment size for “romance scams” was $4,593 in 2023, followed by NFT scams with $3,095, and giveaway scams coming in third with $1,113.

According to the South China Morning Post, a number of Chinese-run criminal enterprises sprawl across Southeast Asia. One of the largest, located in Myanmar, houses more than 2,000 trafficked romance scam workers.