FBI returns funds to victims of fraudulent banker

WICHITA, KANSAS (AP) — There were sobs of relief in a federal courtroom in Kansas Monday as dozens of people whose savings were stolen by a bank CEO learned that federal law enforcement had recovered their money.

“I just can’t describe the weight that’s been lifted from us,” said Bart Camilli, 70, who with his wife Cleo just learned they will get back about $450,000 – money Bart started saving at age 18. when he bought his first individual pension. “It Changes Life” account.

In August, former Kansas bank CEO Shan Haynes was sentenced to 24 years in prison for stealing $47 million from customer accounts and transferring the money to cryptocurrency accounts run by scammers. Prosecutors said Haynes 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 of his own money in the scheme. The deposits were “thrown into the ether,” prosecutor Aaron Smith said.

Haines’ Heartland Tri-State Bank, which ran out of cash, was shut down by federal regulators and sold to another financial institution. Customers’ $47.1 million in savings and checking accounts were insured by the Federal Deposit Insurance Corporation, which covered their losses.

But the 30 shareholders of the community rural bank that Hanes helped create, including his close family friends and neighbors, believed they had lost $8.3 million in investments: Well-planned retirements were canceled, funds for long-term care for the elderly disappeared, education funds and wills for children and grandchildren were reset to zero.

Shareholders stood up Monday to support federal Judge John Broomes in Wichita after he told them, one at a time, that they would be paid in full. The FBI has recovered funds from a cryptocurrency account owned by Tether Ltd. in the Cayman Islands.

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

Margaret Grice came to court Monday expecting to pay back $1,000. Instead, she learned she would get back nearly $250,000, her entire 401(k).

“I’m just really excited,” she said. “I can breathe.”

Prosecutors said Haynes, who was CEO of Heartland Tri-State Bank in Elkhart, Kansas, lost money in a scam called “hog slaughter,” or a method of fattening pigs before slaughter. In the scam, a third party gains the victims’ trust and eventually convinces them to invest all their money in a cryptocurrency, which promptly disappears. US and UN officials say these schemes are spreading, with scammers, mainly in Southeast Asia, increasingly taking advantage of Americans.

According to court records, Haynes began buying what he believed to be $5,000 worth of cryptocurrency in late 2022 while communicating with someone who contacted him via WhatsApp. A few months later, he donated the funds to his church and investment club. Records show the fraud accelerated in the summer of 2023, when Haynes transferred $47.1 million from customer accounts in 11 wire transfers in just eight weeks. In his opinion, each transfer was necessary to stop the investment and withdraw funds, court records say. On the fake website, he watched as the amount of money grew to more than $200 million.

“He should have taken some of the money and the rest of the money should have gone back to the bank,” explained his lawyer, John Stang. “Now it’s fiction, it didn’t exist. Now we all know it… It failed.”

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

“In my heart of hearts, I had no intention of causing the harm that I did,” he said. “I will always struggle to understand how I was defrauded and how what I thought was just getting my money back was made worse.”

Prosecutors said Hanes wasn’t just a victim of fraud, he crossed the line when he began taking clients’ money and violating banking regulations. In May, he pleaded guilty to embezzlement by a bank employee.

His prominence in his hometown of 2,000 people made it easier for him to get away with it. Federal Reserve Investigation found; he served on the school board, volunteered at swim meets and worked for the Kansas Bankers Association.

He was also a banking leader outside of his rural community. In recent years, he has testified before congressional committees on the importance of community banks to farming communities and has also served as a director of the American Bankers Association, which represents nearly all banking assets in the United States.

Prosecutors said Monday that the FDIC wants to recover insurance claims it has reimbursed bank customers. But Judge Broomes said the economic circumstances of the shareholders “who were rendered insolvent by the fraud scheme” justify that they must first pay them the money before the FDIC recovers anything.

Haynes, 53, may be in his 70s when he is released and is unlikely to be able to repay the $47.1 million still owed to the Federal Deposit Insurance Corporation (FDIC).

In the court document, Haynes and his lawyer tried to explain what happened.

“Mr. Haynes made some very bad decisions after becoming embroiled in an extremely well-organized cryptocurrency scam,” they said. “He was a pig that was slaughtered.”