By Martha Mendoza, Associated Press

WICHITA, KANSAS – Sobs of relief broke out in a federal courtroom in Kansas on Monday as dozens of people whose savings had been embezzled by a bank CEO learned that federal authorities had recovered their money.

“I just can’t describe the weight that was lifted off our shoulders,” said Bart Camilli, 70, who along with his wife Cleo had just learned that they would get back about $450,000, money Bart began saving at age 18 when he bought his first individual retirement. account. “It’s life-changing.”

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

Hanes’ cashless Heartland Tri-State Bank was closed by federal regulators and sold to another financial institution. Customers’ checking and savings accounts worth $47.1 million were insured by the Federal Deposit Insurance Corp., which paid their losses.

But there were still 30 shareholders of the community-owned rural bank that Hanes helped found (including family members, close friends and neighbors) who thought they had lost $8.3 million in investments: well-planned retirements collapsed, care funds of long-term seniors disappeared, education funds and legacies for children and grandchildren eliminated.

On Monday, shareholders stood to applaud federal Judge John W. Broomes in Wichita after he told them, one at a time, that their money would be returned in full. The FBI recovered the funds from a cryptocurrency account owned by Tether Ltd. in the Cayman Islands.

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

Margaret Grice went to court Monday thinking she would get $1,000 back. Instead, he learned he would get back nearly $250,000, his entire 401(k).

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

Prosecutors said Hanes, who was the CEO of Heartland Tri-State Bank in Elkhart, Kansas, lost the money in a scam known as “pig butchering,” or the way pigs are fattened before slaughter. In the scam, a third party gains the trust of the victim and, over time, convinces them to invest all their money in cryptocurrencies, which immediately disappear. US and UN officials say these schemes are proliferating, and scammers, primarily in Southeast Asia, are increasingly preying on Americans.

Hanes began purchasing what he thought was $5,000 worth of cryptocurrency in late 2022, communicating with someone he had contacted on WhatsApp, according to court records. A few months later he transferred funds from his church and investment club. Records show the scam accelerated in the summer of 2023, when Hanes transferred $47.1 million from customer accounts in 11 wire transfers in just eight weeks. He thought each transfer was necessary to end the investment and withdraw money, according to court records. He watched, on a fake website, as the money appeared to grow to more than $200 million.

“He was supposed to take some of the money and the rest was supposed to go back into the bank,” his attorney John Stang explained. “Now it is fiction, it did not exist. “We all know that now… He failed big time.”

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

“From the depths of my soul, I had no intention of ever causing the harm I did,” he said. “I will always struggle to understand how I was deceived and how what I thought was simply getting the money back was making things worse.”

Prosecutors said Hanes was not only the victim of a scam, but crossed a line when he began taking customers’ money and violating banking regulations. In May he pleaded guilty to embezzlement by a bank official.

His prominent position in his hometown of 2,000 people made it easier for him to get his way, a Investigation of the Federal Reserve System found; he had been on the school board, had volunteered as a swim meet official, and had worked at the Kansas Bankers Association.

He was also a banking leader beyond his rural community. In recent years, he testified before congressional committees about the importance of local banks in farming communities and served as a director of the American Bankers Association, which represents nearly all banking assets in the U.S.

On Monday, prosecutors said the FDIC wanted to be reimbursed for insurance claims it reimbursed the bank’s customers. But Judge Broomes said the financial circumstances of shareholders “who became insolvent due to a fraud scheme” justified returning the money to them before the FDIC recovered anything.

Hanes, 53, could be in his 70s when he is released and is unlikely to be able to pay the FDIC the $47.1 million he still owes.

In a court filing, Hanes and his attorney attempted to explain what had happened.

“Mr. Hanes made some very bad decisions after getting caught up in an extremely well-run cryptocurrency scam,” they said. “He was the pig that was slaughtered.”