Latest news with #HeartlandTriStateBank
Yahoo
20-06-2025
- Business
- Yahoo
DOJ Ties Kansas Bank Collapse to $225 Million 'Pig Butchering' Seizure
A Kansas banker who looted millions from his small-town bank in 2023, which triggered its collapse, lost much of the money to overseas crypto scammers targeted in a record-breaking DOJ bust, according to a complaint filed Wednesday. Prosecutors have filed a civil forfeiture action targeting over $225 million in laundered USDT, part of a butchering scam with ties to a Philippines call center that ensnared Shan Hanes, the disgraced former CEO who embezzled $47 million from Heartland Tri-State Bank, a theft which was directly attributed to the agricultural lender's demise in 2023. According to the Department of Justice complaint, OKX, a crypto exchange, provided key information that helped identify an intricate network of accounts on the exchange used to launder the crypto proceeds. Scammers laundered funds by first directing victims to send USDT to 93 scam-controlled deposit addresses. From there, the funds were routed through as many as 100 intermediary wallets in a process designed to obscure the source of funds and mix deposits from multiple victims, according to the complaint. These laundered funds were then funneled into 22 primary OKX accounts and further shuffled across 122 additional OKX accounts, all linked by shared IP addresses, reused KYC documents, and coordinated behavior allegedly traced to a Manila-based scam compound, which the complaint names as ITECHNO Specialist Inc. In total, the DOJ says that approximately $3 billion in transaction volume was generated by this laundering network. In total, the DOJ says there were 434 victims and has identified 60 of them who lost a combined $19.4 million. The largest of these victims was Hanes, with the DOJ identifying $3.3 million of the $47 million he embezzled in this seizure. Hanes embezzled the money between May 30, 2023, and July 7, 2023, according to both the DOJ complaint and the Federal Reserve's report into the collapse of Heartland Tri-State Bank, one of the banks to collapse in the aftermath of the 2023 U.S. banking crisis. During this six-week period, Hanes initiated 10 wire transfers totaling approximately $47.1 million from Heartland Tri-State Bank, a small community lender focused on agricultural loans, to a crypto wallet he controlled. These wire transfers occurred between the bank's quarterly regulatory reporting periods, allowing the activity to go initially undetected. At the time, Heartland was well-capitalized with $13.7 million in capital and $139 million in assets, but Hanes' actions depleted its liquidity, triggered $21 million in emergency borrowing, and left the bank with a $35 million capital hole, forcing regulators to shut it down in July 2023. According to prior reporting from CNBC, Hanes also stole $40,000 from the Elkhart Church of Christ, $10,000 from the Santa Fe Investment Club, $60,000 from his daughter's college fund, and liquidated nearly $1 million in stock from a firm called Elkhart Financial to send to pig butchering scammers. He was sentenced to 24 years in prison in August 2024. The DOJ complaint referred to him as both a perpetrator and a victim. Crypto seized by the U.S. government, such as in this case, is likely to be earmarked for a not-yet-established stockpile ordered by President Donald Trump. The bitcoin BTC reserve and the stockpile of other cryptocurrencies haven't yet been formally established, but the Treasury Department has been leading an audit of governmental digital asset holdings to determine what needs to be gathered. Once established, the long-term crypto holdings will likely put seized bitcoin in one fund and other types of tokens in another. The holdings in this case appear to be in significant amounts of USDT, according to the filing. It's unclear what funds may eventually be returned to victims, as only a relatively small percentage of those directly harmed have been identified.
Yahoo
19-06-2025
- Yahoo
Feds seize $225 million in crypto from crooks who ran giant ‘pig butchering' operation
The Department of Justice on Wednesday asked a court to let the agency seize $225 million from a so-called 'pig butchering' operation—a term that describes scams where con men build up the trust of a victim over time, and then trick them into handing over large amounts of money. The funds, which the crooks held in USDT stablecoins, were laundered through the crypto exchange OKX, according to Justice Department. This is the U.S.'s largest ever seizure of funds tied to crypto confidence schemes, said the agency. While prosecutors didn't name one perpetrator in the complaint, they did say the funds were linked to a 'scam compound' in the Philippines. These locales usually house scores of workers who labor in shifts to lure victims into parting ways with their crypto, like Bitcoin, or cash. Many of these workers are employed by transnational criminal rings and forced to work against their will, according to the United Nations. The DOJ was able to identify more than 430 victims tied to the 144 OKX accounts through which victims' funds were laundered. One of these victims was Shan Hanes, the former CEO of Heartland Tri-State Bank in Kansas. In August 2024, Hanes was sentenced to 24 years in prison for stealing $47 million of his bank's funds to invest in what he thought was a cryptocurrency investment opportunity that turned out to be a scam. 'These schemes harm American victims, costing them billions of dollars every year,' Matthew Galeotti, head of the DOJ's criminal division, said in a statement. Losses from cryptocurrency scams have accelerated in the U.S. over the past five years, according to the most recent annual report on internet crime from the Federal Bureau of Investigation. From 2023 to 2024, the money Americans lost skyrocketed 66% to $9.3 billion and the number of complaints the agency received more than doubled to nearly 150,000, said the government agency. The most common crime linked to cryptocurrencies was extortion, or when bad actors manipulate photos or videos to create explicit content and lure victims into sending crypto. The second most common type was investment fraud, or when criminals promise victims outsized returns if they send them money. This latter category includes Hanes, the former bank CEO. 'He was the pig that was butchered,' wrote his lawyer at the time of his sentencing. 'Mr. Hanes's vulnerability to the Pig Butcher scheme caused him to make some very bad decisions, for which he is truly sorry for causing damage to the bank and loss to the Stockholders.' This story was originally featured on
New Straits Times
23-05-2025
- Business
- New Straits Times
Asean must act against cyberscam industry
A TROUBLING issue continues to fester in many countries: the growing proliferation of cybercrime and multibillion-dollar cyberscam networks. Many of these scam centres have taken root within Asean countries in recent years, thriving on corruption and a lack of transparency. Now at what the United Nations Office on Drug and Crime (UNODC) calls an "inflection point" for cybercrime regionally, nations around the world are stepping up their responses to the risk of online fraud by scam centres in Southeast Asia. These centres, which were once directed at domestic victims, have since gone global with the adoption of artificial intelligence (AI). This has allowed for the development of alternative online worlds, into which victims are pulled and subsequently defrauded. Scam operators also, now, have years of accumulated knowledge at their disposal, and can use this database of information to identify their potential victims. Disarming and increasingly sophisticated tactics have crippling impacts on citizens, not just in Asia but across the globe. For example, people who are worried about online banking are being targeted by callers purporting to represent law enforcement agencies, requesting they share their card details for investigation. Similarly, people who want to start a relationship online find themselves talking to people who seem to match their criteria perfectly. United States-based Heartland Tri State Bank is a case in point. It collapsed in 2024 after its chief executive officer, Shan Hanes, was found guilty of embezzlement and imprisoned for making US$47 million in wire transfers to cyberscammers. The scammers had convinced him to invest in a bogus cryptocurrency scheme, and Hanes would watch his "investment" increase in value on a fake website. The bank's failure cost the Federal Deposit Insurance Corporation US$54.2 million to reimburse savers. Local Kansas shareholders in the bank, including farmers and teachers, saw their investment wiped out. The Philippines, Laos and Myanmar have taken steps, in response to international pressure, to crack down on cybercrime operations within their environs. However, in the case of Cambodia, the UNODC points out that there has been no sustained law enforcement drive since a series of raids focused on Sihanoukville in 2022. And in February this year, shortly before Filipino police rescued over 30 Indonesian nationals from an online operation in Pasay, its operators were exploring a move to Cambodia. The role of certain Asean members in propagating cybercrime runs deep in some cases. The O-Smach Resort near the Thai border in Cambodia has been repeatedly identified as a major hub for cyberscam operations and human trafficking. Victims at this centre have described horrific working and living conditions, including long hours, physical abuse and threats of violence. In September last year, the United States Treasury Department sanctioned Cambodian tycoon, Ly Yong Phat, and his L.Y.P. Group Co, which owns O-Smach Resort, specifically citing "serious human rights abuse related to the treatment of trafficked workers subjected to forced labour". This is a problem that is not exclusive to Cambodia, but also to other Asean members, including Myanmar. This shows that there is still more to do — particularly among Asean members — to clamp down on these undoubtedly complex, and increasingly cross-bordered, operations. Asean members should push for an independent investigation into certain places like the casinos used for cybercrime operations. The findings of such an investigation must lead to sanctioning of those involved. Without this, the security — and economy — of the region will continue to be threatened. The UNODC has been clear that corruption and lack of effective governance is a driving factor in the growth of cybercrime. Thus, if governments especially in Southeast Asia are serious about protecting their citizens, they must act.
