Pig Butchering at Heart of Bank Failure — CEO Gets 24 Years in Jail

Kansas bank chief exec Shan Hanes stole money from investors, a church and others to buy crypto­currency to feed  a  scam.

A bank CEO has been sentenced to more than 24 years for stealing almost $50 million. I guess we should say, “former CEO—of a former bank,” because his actions directly contributed to Heartland Tri-State Bank’s collapse.

The perp got suckered into a pig butchering scam and didn’t know how to stop. In today’s SB  Blogwatch, he’s not in Kansas anymore.

Your humble blog­watcher curated these bloggy bits for your enter­tain­ment. Not to mention:  Mr. Sandman.

Oink, Oink, FAIL: You’re in Jail

What’s the craic? Jason Alatidd reports: Kansas bank CEO, ‘pig that was butchered,’ sentenced to prison after crypto scam

“The bank failed”
The former executive of a rural Kansas bank … was sentenced … to 293 months in prison after previously pleading guilty … to one count of embezzlement by a bank officer. … Federal prosecutors said he initiated several wire transfers totaling $47.1 million. The money came from the bank and went to a crypto wallet, … trans­ferred to unidentified third parties.
…
Hanes was the “pig” in a cryptocurrency scam known as “pig butchering,” a term derived from fattening pigs before slaughter. That’s where scammers steal money by convincing someone — the “pig” — to send funds for what they think is a legitimate investment, and they may get more money by promising larger returns on continued fake investments.
…
The Federal Deposit Insurance Corporation, which had insured the bank, absorbed the $47.1 million loss. The bank failed, and investors lost $9 million.

How could this have happened? Niamh Ancell picks up the story: CEO’s ‘greed with no bounds’ costs him 24 years

“Circumvented internal controls”
Hanes completed 11 separate wire transactions between May and June 2023, [totaling] $47.1 million of the bank’s funds. … “Hanes’s greed knew no bounds,” said US Attorney Kate E. Brubacher.
…
According to the Office of Inspector General, … under the CEO’s control, employees at the HTSB circumvented internal controls to process these unlawful transactions. These transfers crippled the organization, its capital and liquidity, causing the bank to collapse.

But what about these employees who enabled him? nancy-drew’s got an unpleasant mental image for you:

If your boss asks you to wire your entire bank’s balance sheet away, you are in the rare position where you can tell your CEO to rectally examine himself with a sharp dry stick and be congratulated for it afterward.

Can it be as easy as telling staff to ignore the controls? smooth wombat ain’t buying it:

Where were the controls? … What happened to all the checks and balances we keep hearing banks have to prevent drug money coming in and going out, or money laundering?
…
Where were the auditors? Where were the regulators? I can guarantee if I tried to transfer $1.5 million out of my account, both the bank and the Feds would be all over me for a week or more trying to figure out what I was doing. Apparently not this guy.

A cautionary tale. PlunderBunny tries to learn from others’ mistakes:

And even at the end, he thought that he could have got it back if he hadn’t been arrested. … It scares me a bit: I think I’m smart enough [not] to fall for this kind of scam. But I suppose many people that fall for scams also think they’re smart. Often they are hit at a time in their life when they are vulnerable. So can I really be sure of myself?
…
I think of my elderly parents: I tell them how to look out for these scams, and all the warning signs. And they understand, but maybe there’s a moment where the scam might work on them long enough.

In related news, over in the British Isles, Aunty Beeb’s Global China Unit keeps a low profile: Scam run from Isle of Man

“Pig butchering”
The dining room and lounge at [a] Hotel in Douglas were packed with dozens of Chinese … scammers conning victims in China out of millions of dollars. [They] used a method known as “pig-butchering.” … Victims were lured by the defendants and their accomplices from bases on the Isle of Man and in the Philipp­ines … accor­ding to Chinese court documents.
…
The defendants would work in teams to pull Chinese investors into chat groups. … One scammer would play the role of an investment “teacher” and others would pretend to be fellow investors. … The fake investors would build an atmosphere of hype and excitement around the money-making skills of the “teacher,” who would then tell the victim to put money into a particular investment platform.
…
The Chinese court said it was difficult to verify the victims’ total losses, but it said … $5.3m had been taken from at least 12 victims. … Conservative estimates put the global annual revenues of the “pig-butchering” industry at more than $60 [billion].

Wait. Pause. How is “pig butchering” different from what we used to call a “long con”? jcrawfordor explains:

The term … ori­gi­nates in Chinese (杀猪盘), where this particular style of scam is often targeted at overseas people via WhatsApp. … “Pig butchering” [is] what the scammers themselves call it. … They’re often run by fairly large, organized operations with paid, trafficked, or otherwise long-term staff manning the WhatsApp personas.

But how does the name relate to the scam? Here’s our own Jeffrey Burt:

Pig butchering frauds refer to the criminal fattening up their victims before taking everything they can. … The relationship is built over time, during which the cybercriminal gradually encourages the victim to invest increasing amounts of funds, at times using a fake investment platform that they control to entice the target to put up their money.

And somehow it keeps going and going. It’s almost as if Jeff S has read the script:

And the scammer is, the whole time, whispering in their ear what they desperately need to believe: “If you just give me more, I promise you’re going to get it all back and far more. … You stole from all these people [but] you will just put the money back. Heck, you can put it back plus more. You’ll be a hero because you’ll have doubled everyone’s money.
…
“But if you don’t get more, you’re going to lose it all. You need to act fast. … This is just a temporary down­swing. … Get more money, buy more while it’s down and when it bounces back up in a week or two, you’ll make so much more.”

And it’s all enabled by imaginary money. Sique sounds like a stuck record:

I wrote it before, but I repeat it again. Cryptocurrencies started out as a libertarian dream of wealth transfer without governmental control. [But] apparently, some governmental oversight is needed, … to sort out the mess of all the scams, embezzlement, pump-and-dumps, outright theft and Ponzi schemes.

Meanwhile, User23 curls up with a good book:

He should have read Bill Black’s classic, The Best Way to Rob a Bank is to Own One.

And Finally:

Channel has a whole 150 subscribers—happy Friday

(For added something, turn on closed captions.)

Previously in And Finally

You have been reading SB Blogwatch by Richi Jennings. Richi curates the best bloggy bits, finest forums, and weird­est web­sites—so you don’t have to. Hate mail may be directed to  @RiCHi, @richij, @richi@vmst.io, @richi.bsky.social or sbbw@richi.uk. Ask your doctor before reading. Your mileage may vary. Past per­formance is no guar­antee of future results. Do not stare into laser with re­maining eye. E&OE. 30.

Image sauce: Pascal Debrunner (via Unsplash; leveled and cropped)