The former CEO of a small Kansas bank was sentenced to more than 24 years in prison for looting the bank of $47 million — which he sent to cryptocurrency wallets controlled by scammers who had duped him in a “pig butchering” scheme that appealed to his greed, federal prosecutors said.

The massive embezzlement by ex-CEO Shan Hanes in a series of wire transfers over just eight weeks last year led to the collapse and FDIC takeover of Heartland Tri-State Bank in Elkhart, one of only five U.S. banks that failed in 2023.

Hanes, 53, also swindled funds from a local church and investment club — and a daughter’s college savings account — to transfer money, purportedly to buy cryptocurrency as the scammers insisted they needed more funds to unlock the supposed returns on his investments, according to records from U.S. District Court in Wichita, Kansas.

But Hanes never realized any profit and lost all of the money he stole as a result of the scam.

Judge John Broomes on Monday sentenced Hanes to 293 months in prison — 29 months more than what prosecutors requested after he pleaded guilty in May to a single count of embezzlement by a bank officer.

During the sentencing hearing, “I called his actions ‘pure evil,’” said Brian Mitchell, who for years was Hanes’ next-door neighbor in Elkhart, a town of 2,000 or so people in southwestern Kansas, north of the Oklahoma panhandle.

Mitchell, whose farm and movie theater chain businesses banked at Heartland Tri-State, said there were around 30 shareholders in the bank who attended Hanes’ sentencing, more than a year after their stock value was wiped out in the failure.

“There were people who lost 70, 80% of their retirement” as a result of Hanes’ actions, Mitchell told CNBC on Wednesday in a phone interview.One local woman is “struggling to afford a nursing home” for her 93-year-old mother, while another woman “can’t retire” now because of the crime, Mitchell said.

Mitchell, who was not a shareholder but who belonged to the investment club victimized by the CEO, said Hanes showed little, if any, remorse for his actions, despite hearing victims tell the judge about the effects of his crime.

“Shan was facing the judge, and he just looked over his left shoulder for a second, and didn’t make eye contact, and said, ‘Sorry,’” Mitchell recalled, describing the scene in the courtroom. “And that was it.”

But Hanes had a look of “absolute shock” on his face when Broomes imposed the stiff sentence and ordered the former bank chief taken into custody immediately, Mitchell said.

Mitchell said that for years he considered Hanes a “good guy,” who like other people in Elkhart pitched in to help others in the small community when they needed help, and preached at his local church. Hanes also testified several times before Congress about community banking.

But prosecutors and bank regulators said that Hanes, who has three daughters with his school teacher wife, began stealing after being targeted in a pig-butchering scheme in late 2022.

That scheme was described in a court filing as “a scammer convincing a victim (a pig) to invest in supposedly legitimate virtual currency investment opportunities and then steals the victim’s money — butchering the pig.”

Hanes, who had served on the board of the American Bankers Association, and been chairman of the Kansas Bankers Association, in December 2022 began making transactions to buy cryptocurrency, which “appeared to be precipitated by communication with an unidentified co-conspirator on the electronic messaging app ‘WhatsApp,’” prosecutors wrote in a court filing.

“To date, the true identity of the co-conspirator, or conspirators, remain unknown,” the filing notes.

Hanes initially used personal funds to buy crypto, but in early 2023 he stole $40,000 from Elkhart Church of Christ and $10,000 from the Santa Fe Investment Club, according to prosecutors and a defense filing.

He also used $60,000 taken from a daughter’s college fund, and nearly $1 million in stock from the Elkhart Financial Corporation, his lawyer said in a filing.

In May 2023, he began to make wire transfers from Heartland Tri-State Bank to accounts controlled by scammers, at first with a $5,000 transfer.

Two weeks later, on May 30, Hanes wired $1.5 million and a day after that, he sent another transfer of the same amount the following day, filings show.

Three days later he directed two wire transfers totaling $6.7 million to be sent by the bank to the crypto wallet, and a whopping $10 million less than two weeks later, and another $3.3 million days afterward.

Hanes told bank employees to execute the wire transfers, and “made many misrepresentations to various people” to get access to the funds so they could be transferred, prosecutors wrote. Heartland Tri-State employees circumvented the bank’s own wire policy and daily limits to approve Hanes’ wire transfers, according to a report by the Office of the Inspector General of the Board of Governors of the Federal Reserve System.

“We believe that the CEO’s dominant role in the bank and prominent role in the community contributed to a reluctance on the part of Heartland employees to question or report the alleged fraudulent activities earlier,” that report said.

Prosecutors wrote that the series of 11 wire transfers from Hanes to the scammer “illustrate a common pattern” in pig-butchering schemes.

“First, there is an initial ‘investment’ followed by another transaction required to secure or guarantee those funds,” prosecutors wrote. “Further ‘investments’ may be made, but always require another need for funds, to guarantee or unfreeze the earlier transfers. This pattern is clearly represented in the defendant’s embezzlement.”

Mitchell confirmed that to CNBC, saying that he got a call from Hanes at 7:40 a.m. on July 5, 2023.

“He said, ‘Brian, I need your help, and you’re the only guy who can help me,’” Mitchell recounted.

Mitchell, who had survived prostate cancer two decades ago, said he thought Hanes was calling him to say that he had the same type of cancer.

But when Mitchell showed up at Heartland Tri-State to meet Hanes, before the bank had officially opened to customers that morning, the CEO told him something much different — and stranger.

“The first thing he says is, ‘Brian, I need to borrow $12 million for ten days, and I’ll give you $1 million for loaning it to me,’” Mitchell recalled. “I’m sitting there and I said, am I in a bank in Elkhart, Kansas, or in an alley with a loan shark in Chicago.”

When he asked Hanes what he wanted the money for, Hanes “pulls out his phone and acts like he’s logging in and he shows me this account that has $40 million, $42 million,” Mitchell said. “He said, ‘Brian, I’ve got this money and it’s in cryptocurrency, and I need $12 million to help verify the funds.’”

Hanes then hold him he had been in touch with a banker in Denver named “Jim” and “another guy in Oklahoma” and they had invested in crypto held in Coinbase accounts, where they had made a lot of money, Mitchell said.

“I told him, ‘You’re in a scam, dude. You’re in a scam,’” Mitchell said. “I stopped him and said, ‘Is this bank money you’re playing with?’ And he said, ‘No, Brian.’”

Hanes kept telling him he needed the $12 million to “activate” the funds he had already transferred to the crypto account, which he said was in Hong Kong, Mitchell recalled.

“I said, ‘Get on a plane, go to Hong Kong, hire an interpreter, and go get a bank check’” for the funds supposedly held there, Mitchell said. “Then I said, ‘I’m not going to loan you the money.’ I said, ‘You’re in a scam, walk away.’”

But later that same day, after Mitchell rebuffed his entreaties, Hanes had bank employees wire $8 million to the scammers’ accounts, prosecutors said in a court filing.

Two days after that, Hanes had employees wire the scammers another $4.4 million.

In the meantime, Mitchell, who was unaware of those transfers during that period, said that after meeting with the CEO he was worried that Hanes would get access to customers’ deposits at the bank and transfer the $12 million that he had asked for.

“We kept checking our lines of credit,” Mitchell said.

“The next week, I was in the bank, and one of the employees caught me, she just looked so stressed,” Mitchell said. The woman told him that Hanes had wired money out of the bank.

“I said, ‘Don’t say another word to me… I’ve got to talk to a board member,’” Mitchell said.

“And I talked to a board member that night, and he went to talk to an attorney that night,” Mitchell recalled.

Hanes was fired within days.

About two weeks later, on July 28, 2023, Heartland Tri-State was closed by the Kansas Office of the State Bank Commissioner was taken over by the Federal Deposit Insurance Corp.

Shareholders were wiped out, but depositors did not lose any money, as Dream First Bank, National Association, of Syracuse, Kansas, assumed all deposits.

Heartland Tri-State, had nearly $140 million in total assets and $130 million in total deposits as of the prior March.

Word quickly spread that a scam had led to the bank’s failure.

But Hanes remained uncharged until last February, when he was charged by federal prosecutors with embezzlement. He was separately charged in Morton County, Kansas, state court by the county attorney in a 28-count complaint related to looting the bank.

Hanes was under house arrest until his sentencing in federal court this week.

“I talked to him last month when he was out mowing his yard,” Mitchell said.

Hanes, who had traveled at one point to Perth, Australia while being scammed to try to recover the funds he transferred, told Mitchell that he believed there had been a way to recover the money up to the point he was arrested.

“He said … ‘If I just had another two months I could get the money back,’” Mitchell recalled.

Mitchell said that at Hanes’ sentencing, Judge Broomes asked Hanes several questions about his actions, but, “He didn’t really have any good answers.”

Broomes later looked at the victims in the courtroom’s gallery before announcing Hanes’ sentence.

“He said … ‘I want you to forgive Shan. I know that he’s hurt you, I know this, but I want you to move on, and I want you to find some joy in your life. Let me discipline him,’” Mitchell recalled.

Broomes also told Hanes that although several people had noted how intelligent the former CEO was, “If you were that intelligent you would have stopped this,” Mitchell recounted.

Hanes’ lawyer John Stang, who did not respond to a request for comment, in a sentencing submission wrote, “Mr. Hanes made some very bad choices after being caught up in an extremely well-run cryptocurrency scam.”

“He was the pig that was butchered,” Stang wrote. “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.”

Kansas U.S. Attorney Kate Brubacher, in a statement, said, “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,” Brubacher said.