Keith L. Shaffer, Bank Embezzlement, Kansas

Keith L. Shaffer, 61, of Altamont, Kan., was found guilty today on federal charges tied to a $134,000 embezzlement scheme that gutted a small Kansas bank’s insurance subsidiary. The verdict, delivered in Wichita, marks the end of a years-long financial deception that prosecutors say betrayed public trust and violated the core duties of a bank officer.

Shaffer, former manager of Labette Insurance Company—a subsidiary of Labette Bank—was convicted on six counts, including misapplication of bank funds, wire fraud, and misappropriation of insurance funds. He also admitted to filing false federal tax returns in three separate instances, charges on which he was convicted. Count two was dismissed before trial; he was acquitted on count three.

According to evidence presented during trial, Shaffer funneled more than $134,000 in insurance sales commissions—money that legally belonged to the bank—into his personal accounts. As a salaried employee, Shaffer had no ownership stake in the commissions. Instead, he repeatedly submitted falsified records to both the bank and the Internal Revenue Service to cover his tracks.

The scheme unraveled as federal investigators from the IRS and FBI began probing irregularities in Labette Insurance’s financial reporting. Bank auditors first raised red flags, leading to a deeper forensic examination that traced the missing funds directly to Shaffer’s accounts.

U.S. Attorney Tom Beall, who oversaw the prosecution, called the breach of trust “a calculated abuse of power.” He praised the investigative work of the IRS, FBI, and Assistant U.S. Attorney Alan Metzger, who led the courtroom battle. “When bankers steal from their own institutions, they don’t just break the law—they poison the system,” Beall said.

Shaffer now faces up to 30 years in federal prison on the misapplication charge alone. Wire fraud carries up to 20 years and a $250,000 fine; misappropriation of insurance funds, up to 10 years and the same fine. Each of the three false tax return counts could add up to three years and a $25,000 fine. Sentencing is scheduled for February 6 in Wichita federal court.