The Daily - The Sunday Read: ‘The Cryptocurrency Scam That Turned a Small Town Against Itself’

Episode Date: March 2, 2025

Jim Tucker could hardly believe what he was hearing. It sounded like fiction, a nightmare too outlandish for an unassuming town like his.It was July 2023, and Tucker was hosting a meeting of the board of Heartland Tri-State Bank, a community-owned business in a small Kansas town called Elkhart. Heartland was a beloved local institution and a source of Tucker family pride: Tucker served on the board with his elderly father, Bill, who founded the bank four decades earlier. All of the board members — the Tuckers and several other farmers and businesspeople — had known one another for years.That evening, however, they were gathering to discuss what seemed, on its face, an epic betrayal. Over the past few weeks, the bank’s longtime president, a popular local businessman named Shan Hanes, had ordered a series of unexplained wire transfers that drained tens of millions of dollars from the bank. Hanes converted the funds into cryptocurrencies. Then the money vanished. Unlock full access to New York Times podcasts and explore everything from politics to pop culture. Subscribe today at nytimes.com/podcasts or on Apple Podcasts and Spotify.

Hi, I'm David Yaffe Bellany, and I cover the cryptocurrency world for the New York Times. Last year, I came across a strange and really interesting story. It was about a bank in Kansas that collapsed. The bank was called Heartland Tristate Bank, and it was located in this tiny rural community in the southwestern corner of Kansas called Elkhart. The town of Elkhart is one of those really tight-knit, isolated communities whose charm and whole sense of itself kind of derives from the way that it's cut off from the outside world.

Everyone in town knows each other. Everyone in town trusts each other. But a bank collapse is really serious business. The federal government has to step in. They have to orchestrate a takeover really quickly, almost under the cover of night, to stop panic from spreading in the market. On the day that Heartland collapsed and that it was taken over in July 2023, a really dramatic scene played out on the streets of Elkhart. There were blacked out SUVs surrounding the bank. Cargo vans with license plates that nobody in town recognized. You had government

officials walking into the bank building with power tools and ladders, pushing all the furniture to the perimeter of the room, taking down the security system, removing laptops and computers and piling all that hardware into the vans parked outside. And then a state banking official got up in front of the staff and made an announcement. The bank had fallen victim to a scam, and now it was insolvent. What was especially remarkable about this scam was how big it was. That's because the primary victim wasn't some random employee.

It was the bank's president, a guy named Shane Haynes, and he had access to tens of millions of dollars, the bank's money. And when Haynes fell victim to this scam, he ended up stealing that money. The total amount that he stole from the bank came out to $47.1 million. Shane Haynes was just about the last person anyone in Elkhart thought would fall for a scam like this. He had been part of the community for decades.

He'd worked his way up from a loan officer to become president of the bank. Everyone in town thought he was super smart, financially astute, a really good and reliable leader of this important community institution. Shane volunteered at high school football games, he served on the school board, preached at the local church, and he also represented the community in Washington, even once testified in front of the House of Representatives about the needs of small-town banks. This wasn't any ordinary bank either.

Its shareholders were all locals. In many cases, people's shares in the bank made up the core of their emergency savings and retirement funds. So when the bank collapsed, people lost the money they had been hoping to pass on to their children and grandchildren. And the person to blame was one of their own neighbors. So when I came across this story, my big question was, how did Shane Haynes, this pillar of the community who everyone in Elkhart knew and trusted,

get ensnared in a scam like this? One that would lead to the downfall of an entire bank. And what does a traumatic event like this do to a small community? That's what this week's Sunday Read is about. Our audio producer today is Tali Abacases. The music you'll hear was written and performed by Aaron Esposito. So here's my story. Thanks for listening.

Jim Tucker could hardly believe what he was hearing. It sounded like fiction, a nightmare too outlandish for an unassuming town like his. It was July 2023, and Tucker was hosting a meeting of the board of Heartland Tristate Bank, a community-owned business in a small Kansas town called Elkhart. Heartland was a beloved local institution and a source of Tucker family pride. Jim served on the board with his elderly father, Bill, who founded the bank four decades earlier. All the board members, the Tuckers and several other farmers and business people had known one another for years. That evening, however, they were gathering to discuss what seemed on its face an epic betrayal.

Over the past few weeks, the bank's longtime president, a popular local businessman named Shane Haynes, had ordered a series of unexplained wire transfers that drained tens of millions of dollars from the bank. Haynes converted the funds into cryptocurrencies. Then the money vanished. Tucker's first inkling that something was wrong came from a friend, an investor in the bank who was close to Haynes. A few days before the board meeting, he confided to Tucker that Haynes had messed up. A wire transfer went out, supposedly to help a struggling customer, and now the bank was $30 million in the hole.

By the time the board members gathered, it was clear that Heartland was caught up in some sort of financial scam, a sophisticated grift that delivered its assets into the clutches of an overseas crypto-crime network. At the meeting, Haynes seemed oddly nonchalant, exuding the air of an overconfident salesman. Tucker had heard that he had spent the past week at an out-of-state leadership conference. Guys, I'm sorry, Haynes told the board, but we're going to get it fixed. Haynes promised that he could recover the money, a total of $47.1 million. All he needed was the board's approval to borrow another $18 million. With the help of some business contacts, he said, he would use those funds to recoup the

many millions he had already lost. His banking career was probably finished, he acknowledged. But the deal came with a sweetener that would allow him to start over. The people I'm working with have built in money from me, hands explained. Tucker, a 50-year-old farmer, had no special expertise in finance. He grew up in Elkhart, graduated from Elkhart High School, and returned after college to work on his family's farm, a 12,000-acre expanse that he had helped manage for nearly 30 years.

He was accustomed to people deferring to Haynes, whom his father considered a brilliant executive, the banking equivalent of Patrick Mahomes, the Kansas City Chief's three-time Super Bowl-winning quarterback. But then Haynes was telling the board that someone in Hong Kong had frozen millions in crypto holdings that he had acquired while working with a couple of internet acquaintances, a banker named Rob, who had good relationships from Washington, and a woman named Bella with family in Australia. Haynes was a confident speaker, and Tucker worried that these explanations, far-fetched

as they were, might sway some of the older members of the board. He could sense that his 92-year-old father was listening closely, straining to keep believing in the man he had trusted for so many years. Haynes seemed hopeful that his pitch had worked. When the board reconvened the next morning, he showed up in shorts and flip-flops, put down his briefcase, and started passing out paperwork, laying out ways for the bank to borrow more money.

But Jim Tucker had had enough. He slid the forms back to Haynes. Shane, I don't even know who you are right now, Tucker said. I don't believe anything you've said. Lodged in the state's southwestern corner, Elkhart is unusually remote, about as far from the capital city Topeka as it is possible for a Kansas town to be.

Many of the roughly 1,900 people who live there work in agriculture, tending to rows of crops that seem to stretch endlessly in every direction, like an ocean. "'People come here with a dream,' Tucker said, and find out it's a lot of work." For decades, Elkhart's emotional center was Heartland, a source of stability in a rapidly changing world. In 2016, Haynes testified at a banking hearing in the U.S. House of Representatives, describing the town as an old-fashioned community built on trust. Some warnings, he said, members of his bank staff woke up to find piles of cash sitting

in their unlocked pickup trucks, informal loan payments from loyal customers who knew the money would end up in the right place. That is what it means to be a community rural banker, Haynes declared. Heartland was founded in 1984 after a group from Elkhart, including Tucker's father, banded together with some outside investors. They wanted to create an alternative to another bank in the area, a business they felt and made it too difficult to secure loans. The new bank became a point of pride for Elkhart, even after it was taken over in the early 1990s by a holding company called Kansas Bank

Corporation. Around that time, Haynes, who grew up in nearby Keyes, Oklahoma, started at the bank as a loan officer. He rose up the ranks and was eventually named president in 2008, earning acclaim for his fluency in both the language of finance and the farming vernacular of his neighbors. A part-time preacher at a local church, Haynes embodied a certain small-town ideal. He lived in a nice house with his wife and three daughters and volunteered at high school football games.

But in 2011, the leaders of the Kansas Bank Corporation grew concerned about Haynes, according to Tina Call, who served on the company's board at the time. They had discovered problems in his loan portfolio, borrowers who lacked sufficient collateral, financial paperwork that didn't seem to add up. Haynes was eventually fired for reasons that remain in dispute years later.

A lawyer for Haynes says he was simply a casualty of downsizing at the bank. Call says that explanation is completely false. Regardless, Haynes still had a powerful network in Elkhart, local allies who helped him turn a career setback into a business opportunity. Just as Bill Tucker had 30 years earlier, Haynes assembled a group of local investors who started a bid to buy the bank and restore control of the most important institution in Elkhart to people who actually lived there. In 2012, Haynes returned as president of Heartland, which adopted an ownership structure that has become common across America. The bank was controlled by a group of roughly 35 local investors,

including Haynes and his wife, as well as Jim Tucker and his father. No one outside Elkhart would dictate the bank's future, and all the profits would flow back into the area. For years, under Haynes' leadership, Heartland generated a reliable dividend. Money the bank's shareholders invested in their farms, saved for retirement, were spent on nursing home care for aging relatives. Elkhart's financial culture was the polar opposite of the crypto ethos that began to go mainstream around the time this new iteration of Heartland was founded. Early crypto proponents envisioned a fully automated form of exchange.

No bankers, no middlemen, just lines of computer code whose techno-rationality would eliminate any need for interpersonal trust. As a career banker, Haynes was skeptical. He once told a colleague that anyone who used crypto must have, quote, something they are trying to hide. Yet, in December 2022, after the woman using the name Bella approached him on social media, Haynes began buying cryptocurrencies himself. Bella claimed that her aunt ran a crypto firm in Australia, and she introduced Haynes to

a website that resembled a crypto investment platform. Soon, she and Haynes were exchanging frequent messages on WhatsApp, usually multiple times a day. By the standards of Elkhart, Haynes was already a wealthy man, but this investment apparently required colossal sums. Within months, he had dipped into his daughter's college fund, spending $60,000 on digital currencies. Online scams are as old as the internet, but the rise of crypto has given con artists a

valuable new tool—dig digital coins that can be transferred instantly without oversight from banks legally obligated to monitor transactions for malfeasance. In 2023, crypto fraud cost American investors an estimated $4.8 billion, according to the FBI. The scams are so common that law enforcement authorities have taken to calling them by a pithy name, pig butchering, a rough translation of an expression widely used in China where these scams have proliferated in recent years. The scammers victim is the pig, slowly fattened for slaughter. The scams typically begin with messages on LinkedIn, Facebook, or WhatsApp from an unknown number or someone posing as a romantic prospect.

Sometimes the conversations lead to business introductions, a connection to a banker or asset manager with a slick headshot and a fictional resume. The target is offered an investment opportunity, often backed up by a fraudulent website masquerading as an actual crypto business or an app that displays fake profits on fake account statements. Eventually, the scams all end the same way. The money disappears. After draining his personal savings, Haynes began stealing from his local investment club, from his church, and finally from the bank.

Over a few weeks, he ordered a series of large wire transfers, telling his bewildered colleagues that he was helping a client. In May 2023, Haynes transferred $3 million from Heartland to an account at a company called Kraken, which offers trading and digital currencies. To buy more crypto, he directed Heartland to borrow about $21 million for a network of regional lenders and siphoned a similar amount using a credit line that the bank maintained with another institution. Over four weeks in June, Haynes set $31 million of the embezzled funds to his crackin' account.

Later, as his friends and colleagues sorted through the wreckage, Haynes would be called a thief, a liar, and pure evil. But his lawyer eventually put it differently. He was the pig that was butchered. On July 5th, 2023, not long before Heartland's board meeting, Haynes sent a text to a farmer in Elkhart named Brian Mitchell. He needed Mitchell's help with something. Mitchell didn't have any role at the bank, but he was used to fielding requests from friends in town. With a diamond stud in one ear, Mitchell stood out among the other farmers. He was

one of the most successful people in Elkhart, a veteran businessman who owned a regional chain of movie theaters, including one a block from Heartland. When Mitchell walked into the bank that morning, he wasn't sure what to expect. Haynes was a longtime friend and neighbor. Their children had grown up across the street from each other. Maybe he wanted advice about a medical problem. But what Haynes actually wanted was 12 million dollars. Immediately. It was surreal, Mitchell recalled. Like, okay, am I in a loan office in Elkhart, Kansas? Or am I in a back alley in Chicago with a loan shark? Haynes told Mitchell a confusing story. Not long ago, Haynes explained,

he started investing in cryptocurrencies with the help of some people he met online. First, he and his partners deposited money on a reputable US platform for buying and selling crypto. The profits were enormous, he said. He took out his phone to show Mitchell his account balance, which seemed to indicate that the investment was worth $40 million. But a problem arose after Haynes and his partners moved the funds to a Hong Kong trading platform that charged lower fees, he told Mitchell. The money had somehow gotten stuck, and the only way to unfreeze it was to send more.

As he sat in Haynes' glass-walled office, Mitchell wondered what his friend had gotten himself into. Mitchell was not interested in sending $12 million to a mysterious crypto operation in Hong Kong. Go there, hire an interpreter, and get a cashier's check, he told Hanes. If you think you've got $40 million in an account, go get it. But Hanes seemed to have stopped listening. He was staring past Mitchell into the bank lobby where his staff was arriving to start

the day. He barely reacted when Mitchell offered his verdict. Shane, I think you're in a scam. Haynes was still in thrall to the people on the other end of his phone, whoever they were. That day, he sent a further $8 million to his crypto account. In a town as small as Elkhart, secrets rarely hold for long. Troubled by what Haynes had told him, Mitchell alerted some contacts at Heartland, and within weeks, the board was holding its crisis meeting, demanding an explanation.

By the end of July, the Kansas banking regulator was examining Heartland's accounts and a procession of state and federal agencies descended on Elkhart. Heartland was insolvent. On July 28, 2023, cargo vans and black SUVs surrounded the bank building on Morton Street. Staff members gathered in the lobby where David Herndon, the Kansas banking commissioner, told them that Heartland would shut down. On Monday, he said, it would reopen with a new owner, a company called Dream First, based a couple of counties over. None of the bank's customers would lose their deposits. Those federally insured accounts would move over to Dream First. But shares in the bank's holding company were now worthless,

erasing years of investment gains. Many of the shareholders lost the bulk of their savings, retirement nest eggs and emergency funds. The day of the closure, Tucker and his father joined the staff in the bank lobby. An hour earlier, Tucker helped the older man find the signature line on the government paperwork that dissolved the business their family started in 1984.

It was probably one of the hardest things I've ever had to do, Tucker said. We still didn't understand why. We didn't understand what happened. The Tuckers lost $1.4 million worth of shares, and with them, a source of wealth that Jim had hoped to pass on to his children. In the lobby, he and his father listened as the president of Dream First delivered a pep talk to Heartland staff, telling them, if you dream it, we can help you achieve it.

At the teller's counter, two young women were crying. The building was full of people Tucker didn't recognize, presumably government officials overseeing the bank's closure. Some of them carried step stools, ladders, and power tools. They pushed the furniture to the perimeter of the room and took apart the bank's security system, removing the cameras. Then they fanned out into the rest of the bank and carried away laptops and computers, piling the hardware into the cars parked outside. The two Tuckers watched it all unfold in front of them.

Just watching it melt, Jim Tucker recalled, burned to the ground, right there before our eyes. The failure of Heartland thrust Elkhart into a state of fear and confusion. Nobody could quite believe what happened, but everyone seemed to agree that the money was gone. Wire transfers out of the bank spider-webbed into an array of untraceable crypto wallets, a federal investigator explained in court last year. There is no indication that anyone knows where it is at this point, he said, or how to access it. Still, a few clues emerged on the blockchain, a public ledger of crypto transactions.

Many crypto scammers are based in Southeast Asia, where organized crime rings run pigbutchering operations out of abandoned hotels and casinos. At least some of the money that Hanes stole may have ended up in the hands of an organization that targeted other Americans. Haines stole may have ended up in the hands of an organization that targeted other Americans. In 2023, the scammers who approached Haines appear to have orchestrated a similar plot that ensnared a wealthy Minnesotan, according to the crypto-forensics firm Chainalysis, which analyzed the Heartland case at the request of the New York Times. The man was approached on LinkedIn by a woman who urged him to invest in crypto and to lead his

wife for her. He lost more than $9 million. Last May, Haynes pleaded guilty to a federal charge of embezzlement by a bank officer, a felony that carries a maximum sentence of 30 years in prison. He also faces local charges that are still pending against him. When he was sentenced in August, Heartland's shareholders drove four and a half hours to the federal courthouse in Wichita to attend the hearing. One by one, they walked up to the courtroom lectern and called for Haynes to receive the longest possible sentence. They could muster sympathy for a scam victim, but not for someone who stole from his neighbors. If he is released the day he dies, that will be one day too early, one of them told the

judge. No one in Elkhart has managed to make sense of the mystery at the center of the betrayal. Why did a successful, financially sophisticated banker, a man the whole town trusted for decades, gamble his life away for a shot at crypto riches. Tucker wondered whether Haynes had been hiding something, some secret problem that only money could solve. On the surface, Shane Haynes was an upstanding and very involved member of our community,

he told the judge in Wichita. Now we're all left to wonder how sincere any of that ever was. Haynes declined requests for an interview and the legal system has offered little clarity. At the sentencing, Judge John W. Brooms, who was overseeing the case, said he hadn't heard anything that helps me understand it. Even Haynes' defense lawyer, John Stang, seemed to be grasping for an answer. "'I keep hearing the question why,' he said in court. Was it greed?

Was it being gullible? Apparently he wasn't intelligent enough." In the Wichita courtroom, Haines offered his only public reflection on the bank collapse. Wearing a gray suit, he walked up to the lectern, glancing nervously at his former friends in the gallery. I'm sorry, he told the judge. Until the very end, he explained, he thought he was involved in a legitimate business deal. In January of 2024, he told the court he made a futile attempt to recoup the lost money,

flying to Perth, Australia, where some of his non-existent business partners had supposedly been based. He was in touch with them until the moment he landed at the airport, but no bailout materialized. It was only then, months after the bank shuttered, that he accepted he had been tricked. I'll forever struggle understanding how I was duped, Haynes said. I should have caught it, but I didn't. After Haines finished speaking, Judge Brooms rocked backwards in his chair and turned to face the shareholders. The best thing for you is to forgive this man, he said. Leave matters of retribution to me.

That's my job, and I'll see that it's done. He sentenced Haines to 24 years and five months in prison, a punishment even greater than federal prosecutors had requested. A chorus of yeses echoed from the shareholders. Haynes' shoulders slumped. As two US Marshals approached him, he undid his tie, slipped off his suit jacket, and emptied his pockets. Behind him, the shareholders weren't quiet. Haynes' sister and one of his daughters clung to each other, their sobs breaking the silence. Haynes looked at them once, quickly, before the Marshals handcuffed him and let him out of the room. One day last October, Tecker got a call from an investigator at the FBI.

It was good news. Federal officials had recovered $8 million of the stolen funds, which had been hidden in an account full of Tether, a popular cryptocurrency. The stash was a small fraction of what Haynes stole, but it would be enough to reimburse the shareholders for nearly all the money they had invested in the bank. The jubilation Tucker might have expected to feel was tempered by sadness. His father had been in and out of the hospital, and a doctor warned that he had only days left to live. That night, Tucker went to his father's hospital room and shared what he had heard.

Bill Tucker blinked a few times and then said, Oh my, he died a week later. In Elkhart, Tucker and the other shareholders were still searching for answers, an explanation that makes sense. For decades, they felt bound to their neighbors by ties of family and friendship, ties that turned out to be weaker than they supposed. And then their lives were upended by a chain of connections they had never imagined. Invisible links to villains on the other side of the world. After the bank collapse, Tucker started therapy, hoping he could reach a sense of equilibrium. For now though, he relishes the idea that Haynes will suffer in prison, enduring sleepless nights and days filled with misery. The demise of Heartland is still a source of pain.

The last fifteen, sixteen months of my dad's life, this was what was on his mind, Tucker said. He lived a good life, he was a good person, and then that's what he goes out with. Elkhart was once just a little farming town in the middle of nowhere, cut off from everything but the land itself. It was a place whose isolation was part of its charm, where neighbors prayed together and relied on each other. Now every time Tucker drives past the bank, he said, his voice tralling off.

That one stings.