32
votes
Kansas bank collapse due to executive caught in pig butchering investment scam from Asia
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- Title
- A bank failure shattered trust in this Kansas town. Only honest talk will heal it. * Kansas Reflector
- Authors
- Clay Wirestone, Abriona Markham, Sherman Smith
- Published
- Apr 7 2024
- Word count
- 1794 words
I'm going to take a second to draw parallels between SBF and Hanes because the end of the article had this chestnut
Now, SBF got 25 for $8 billion. This guy stole $47 million. The classic joke about the difference between a million and a billion being about a billion dollars is a bit of an understatement here.
The problem is $1 million is life changing money for most people. Even if you're earning $100k a year, a million is 10 years salary. So, to lose that is obviously going to rile people up. But, white collar crime, he 'thought' he was making a good investment, I'm willing to bet he'd of paid everything back once he got his money out, we'd better go easy on him.
I dunno, it's just funny to me.
Also- the people in that town will probably mostly be made whole via the FDIC. Not so much with FTX.
Crazy how unpredictable life is in that way. Fairness is subjective I suppose.
Slightly off-topic, but I'm going to take a minute to applaud States Newsroom for making this local journalism possible. This small-town story is of national (and possibly international) importance - it establishes how vulnerable our finances can be to breaches of trust like this.
I'm personally risk-averse where money is concerned. I don't think I'd be susceptible to a greed-driven stock or crypto pitch, or likely to deal directly with anyone who is. But we have to trust that our banking institutions and their officers are similarly cautious and well-informed in their custody of our funds. That didn't work so well for the true victims of this scam, Heartland Bank's customers, employees, and shareholders.
Over the years, I've had to work with a couple of small businesses that got hit with wire fraud scams - it was very clear that the scammers had hacked mail accounts of trusted personnel in order to set up the fraud, and the employees who initiated the transfers did so in good faith. They lost their jobs anyway. In this case, I can't even imagine how betrayed the bank staff were by someone they knew face-to-face and trusted. Hanes betrayed everyone, regardless of whether he personally was victimized, and I can't see why he should ever show his face in public again.
Absolutely. My first reaction was one along the lines of “wait, real actual destructive banking fraud and corruption is being reported?”
I have little to no faith that if this was a National-sized bank we would have EVER heard about it.
Don’t gamble what you can’t lose, live below your means, don’t debt, and bank carefully. I use a big regional Credit Union as my banking home base and then mess about with risk using big known tools.
I don't have any deep insight in this story, but the concept of a pig-butchering scam is quite scary. A scammer slowly builds trust with the victim and presents early investment wins in order to build up to larger investments. Eventually, the investment gains are not available to the victim, since there were never any real gains, as the entire system is a fraud and the scammer ghosts the victim.
I suspect that most people could be susceptible to such a scam, especially those who believe they are smarter than others around them or who seek the social connection and early ego boosts offered by the scammer.
I think awareness is a good thing here, as digital relationships make these sorts of scams easier to pull off.
I’m trying to identify the takeaway lesson here. I think it’s either “never trust strangers online” or “always verify liquidity of small investment gains before upping the stakes.”
I think the first one is broadly correct, it’s a good rule of thumb that I’ve been following since I first logged on in the ‘90s. Everyone would benefit from maintaining a skeptical attitude in all their online activity. Basic opsec is sorely lacking for most people, I think.
At the same time it kinda sucks to paint all of humanity with such a broad, cynical brush. The internet is a social technology, and that’s a fundamentally anti-social posture to advocate for. The problem is, it’s becoming increasingly difficult to discern the wolves from the sheep online. If I’m being honest, I’m more implicitly trusting of Tildes users than, say, some random “wrong number” texter or Facebook poster. I shouldn’t be. But this is a comfortable, familiar place with friendly people and a short list of regulars with whom I feel some sense of rapport. If one of those users turned out to be a trust-building pig butcher playing the long game, well, I can easily imagine myself being led to slaughter. Or any of us. I don’t want to spread paranoia but… just don’t ever let your guard down.
The other lesson is more specific to this scam. As I understand it, the scammers will convince victims to use some legitimate-looking but bogus investment platform. I think there’s some “zero risk” angle to entice the victim to play by offering them free credits to invest with for starters. This part goes well; the victim logs into their portfolio a few days later and sees that their “money” has multiplied.
So if anyone finds themselves at this point of the process, I think the smart move is to verify you can cash out, before putting a dime of your real money in. I think there’s always a handwavy reason why you can’t, maybe a “waiting period” for new accounts or something, I don’t know. This is probably where the scammer really starts ratcheting up the urgency and pressure. There will be some story about why RIGHT NOW is the time to go all-in. Resisting that is the hard part. If you can’t take possession of your gains, they were never your gains to begin with.
The only other advice I can offer is about something I’ve heard with older scams… I don’t know much about the technical details, but I believe scammers can initiate a wire transfer to you that will actually show money as having been received in your account. You will think you have possession of the funds at this point, but you don’t. After a few days, the bank determines that the transfer was fraudulent and the money goes poof. I mention that because I can totally imagine a scenario where this method is used to fake “cashing out” so the victim thinks they’ve established the credibility of the investing platform. That gives them confidence to start pouring real money into it. Probably a good idea to wait an additional week or so to make sure the money’s really truly yours before proceeding.
For me, I just don't invest except on very formal terms with reputable companies.
I trust here but I don't put my money on the line. I would accept a tip about a job here, but not a tip about a stock or investment.
Oh, I might throw $20 at a penny stock tip if anybody had one.
I’ll play penny-ante poker, but after about $50, I’m out. Too stressful, and I like my wiring that way.
Social liberal fiscal conservative.
I think a key factor here is that its a small town and this was definitely an 'affinity scam' where people who had known each other for years were taken for a ride, thinking particularly of the investment club that ended up disbanding.
On reading that I flashed back to 2010 when my own father in law very nearly got scammed by an 'investor' who was taking local's money and investing in some mysterious stock exchange and his own firm with a promise of about
10% returns(edit: Nope. Just looked it up again, he was promising and delivering 5% PER MONTH, so people put in 10k were getting 500 a month!) It was working well, and many people in the town of about 1000 people got into it because this guy was local, he owned a farm nearby and he was a trusted community member, plus he was linked to a local lawyer who gave the veneer of authenticity. It also crept into the church, where a lot of the community attended, and once influential leaders in the church were sucked in, then others soon followed. This happened in another small town too, with the same 'affinity' approach in another church.Meanwhile the main 'investor' was expanding his family farm and had some grand plans to build some type of western amusement park on his land, which seemed odd, but everyone just figured he's doing really well, he can do what he likes with his money. Things kept going for several years til it all collapsed when a church leader finally did the math, and reported it to the securities authorities and then a few people tried to withdraw their money and found it wasnt there.
The entire thing was a ponzi scheme. Turns out the 'investor' had been spending a lot of the investment money and paying the new investors with the older money til he couldn't. In the end they stole about $37M from the community which isn't huge on a national scale but it certainly impacted many local people's life savings.
The 'investor' ended up getting a 6 year jail sentence, at age 64, and the lawyer got 8 years. He even got out on parole after a few years and ended up going back into jail for lying about his bankruptcy.
I dont know if anyone got any money back. It was a hard lesson for everyone as many relationships in the community were damaged by good faith investments that went south.
In case anyone is interested in learning more about this type of scam, LastWeekTonight with John Oliver covered it in great detail recently.
I think the video even mentions this exact incident!
Also meta noise: the town name is Elkhart...so Deer Deer town?
Not necessarily but maybe. It's perfectly fine to say "X Bank Collapse due to Event Y" for a past tense event in a headline. The "X Bank Collapse" can be thought of as a name. For describing a present tense or very recent event, "X Bank collapses due to Event Y" could be better. Kind of a style choice in my opinion.
Either a missing s or a missing was. Thanks.