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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 Tri -State 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 Hartland 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.
And 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 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 haines this pillar of the community who everyone in elkar 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 Abacassus.
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 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.
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 for me, Hans 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 in 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 mornings, 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 had 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 Keys, 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.
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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, or 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, 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 scammer's 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 from 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 sent $31 million of the embezzled funds to his Kraken 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 immediately.
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 U .S.
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 Haynes.
If you think you've got $40 million in an account, go get it.
But Haynes 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 So
