The former CEO of a Kansas bank embezzled millions from the organization and wired the funds to criminals in a massive pig butchering scam.
Shan Hanes was sentenced to 24 years in prison after pleading guilty to one count of embezzlement. Over eight weeks, he initiated a series of wire transfers that cost the Heartland Tri-State Bank $47 million and ultimately led to its collapse. While Heartland’s deposits were insured, the bank’s shareholders lost everything.
“Though an extreme example, this tragic loss of funds affecting so many innocent victims just reinforces how damaging and pervasive scams that prey on emotional vulnerabilities can be,” said Tracy Kitten, Director of Fraud and Security at Javelin Strategy & Research. “Pig butchering scams, which rely on techniques that ‘fatten’ victims up via emotional means like romantic possibilities or too-good-to-be true earnings potentials, are increasingly prevalent.”
False Pretenses
In 2022, a cybercriminal contacted Hanes through WhatsApp, according to CNBC, convincing him of a promising investment opportunity in virtual currency. Hanes began purchasing substantial sums of cryptocurrency and sending them to the criminals, who have yet to be identified.
Initially, Hanes used his own funds, but he soon started stealing—first from the local church and then from his daughter’s college account. He eventually directed bank employees to wire millions of the bank’s funds under false pretenses.
Bank staff grew concerned about the transfers but were reticent to question a man who was not only the CEO of the bank, but also a respected leader in the community. Hanes managed to send a total of 11 transfers from Heartland, bypassing the bank’s limits on the frequency and amount of wire transfers.
Hanes continued to believe the scam was legitimate until his arrest, according to CNBC, underscoring how criminals were able to manipulate a trained financial professional into sending millions in irrevocable transfers. This attack is part of an increasing trend where criminals use social engineering tactics to exploit their victims’ emotions.
“Otherwise logical and successful individuals are often easily lured into these types of cons and then find themselves in too deep once they suspect they’ve been duped,” Kitten said. “From there, it’s a downward spiral that oftentimes has far-reaching effects that go far beyond financial losses.”
Fact From Fraud
Criminals have vast amounts of data on consumers and businesses at their disposal, often obtained through data breaches like the recent National Public Data breach.
However, consumers and organizations also share a wealth of information about themselves on social media and the internet, allowing criminals to study their targets from afar and develop customized scams. When a personalized approach is combined with sophisticated technology, it becomes increasingly harder for anyone to discern fact from fraud.
“The overarching message here is that financial institutions have critical roles to play in detecting scams based on stronger data analytics and behavioral monitoring—detection that would raise a flag when consumers are too emotionally tethered to a scam to see reality clearly,” Kitten said.