A Crystal Lake man and “serial fraudster” has reported to federal prison to serve a nearly 5-year prison sentence for his role in an $8 million Ponzi scheme despite awaiting trial in McHenry County for allegedly stealing from a McHenry veterans group.
Alan J. Hanke, 61, of Crystal Lake, is facing a March 30 trial date in McHenry County on charges of theft by deception over $10,000, a Class 2 felony, and fraud by use of debit or credit card, a Class 4 felony.
A criminal complaint filed in McHenry County Circuit Court in September 2024 said Hanke used a debit card belonging to Sons of The American Legion in McHenry without authorization.
Hanke, between January 2023 and March 2024, made cash withdrawals and purchases totaling over $10,000 with the card, the complaint said.
The complaint and prosecutors said the card was used at various restaurants and retail establishments, along with online websites, including Amazon, as well as a boat rental out of Florida.
Prosecutors said Hanke was the Sons of The American Legion commander and had access to the funds through his role.
A warrant was issued and Hanke was processed in the McHenry County Jail. He was later released from custody because the charges are not detainable under the state’s cashless bail law.
A judge ordered Hanke to have no contact with any member of the American Legion or Sons of the American Legion or any location of the two non-profit veteran organizations. He was also ordered not to hold office with any non-profit organization.
Court records show Hanke pleaded guilty on July 24 to one count of fraudulent use of a credit or debit card, a Class 4 felony, in exchange for his more serious charge being dismissed.
The plea was a blind plea and a sentence was not pre-determined. McHenry County Judge Tiffany Davis scheduled a sentencing hearing for Hanke for September 26.
In August, attorney Albert Wysocki, whom Hanke had just retained, filed a motion to withdraw his client’s guilty plea.
Wysocki said that Hanke’s guilty plea was entered under a “misapprehension of the law as well as a misapprehension of the facts, and further that there is doubt of the guilt of the accused…”
The attorney said that Hanke was seeking to have the case proceed to trial and that Hanke’s previous attorney told the man that he had to plead guilty in the case or he would withdraw as his attorney.
“That the Defendant, since engaging his then Counsel of Record, repeatedly told Counsel that he was innocent of the charges in that he never had an intent to defraud The Sons of the American Legion or anyone else,” the motion said.
Wysocki also said that Hanke’s previous attorney never explained to Hanke the consequences of pleading guilty to the charge he pleaded guilty to and that the attorney disregarded numerous pertinent documents to aid in his defense.
“He was told by Counsel to just cooperate and answer affirmatively any questions that this Court would ask of him,” the motion said, referring to the day of the guilty plea.
A hearing on the motion was held in front of McHenry County Judge Tiffany Davis in September, and the judge granted the motion despite prosecutors arguing against allowing Hanke to withdraw the plea.
Davis set a jury trial for January 26, but that date was pushed back to March 30.
Wysocki also filed a motion seeking to delay the trial after arguing that he and his client were in need of more time in order to adequately prepare this case for trial.
Wysocki said that there had been a delay with the prior attorney in turning over documents. He also said that a previous subpoena issued by the last attorney to The Son of The American Legion of Post 491 had not been fully complied with.
The judge granted the motion during a hearing last week. Ahead of the scheduled March 30 trial, a status hearing was set for February 19 and a trial conference on March 26.
Hanke reported to FMC Rochester federal prison on Friday to serve a nearly five-year sentence after he pleaded guilty in a separate case in June 2024 to conspiracy to commit securities fraud for his role in misappropriating more than $8 million as part of a Ponzi scheme, according to the U.S. Attorney’s Office for the Eastern District of New York.
As part of his plea, Hanke also admitted that he filed a bankruptcy petition and documents in a bankruptcy proceeding to conceal the conspiracy.
He was indicted in the case in February 2024.
“Hanke admitted today that he conspired to defraud clients of millions of dollars of their investments, and then tried to cover up his crime by declaring bankruptcy which was an intentional abuse of the U.S. Bankruptcy Court,” United States Attorney for the Eastern District of New York Breon Peace said last year following the plea.
“Today’s guilty plea reaffirms my Office’s efforts to root out white-collar crime where we find it and ensure integrity in the financial markets and the court system,” Peace said.
The indictment said that between November 2018 and August 2021, Hanke — the sole member of IOLO Capital (IOLO) — persuaded numerous investors, often in meetings in New York City, to invest in IOLO or related companies run by him.
Prosecutors said Hanke promised investors high returns within short periods of time by investing in, among other things, “standby letters of credit,” “medium-term notes,” and “high-yield bonds.”
He also assured investors that their investments would be insured against losses, prosecutors said. Nearly all the money that the victims invested with Hanke was not recovered.
Prosecutors said the bulk of the victims’ money went to Hanke’s personal expenses, including cruises, airfare, hotels, gambling expenses and a luxury car.
Hanke also paid co-conspirators and other investors with money that he wrongfully obtained during the scheme, prosecutors said.
Hanke filed a bankruptcy petition in June 2021 in which he sought to discharge the debts that he owed to his victims.
In the bankruptcy petition, Hanke disclosed that he received monthly Social Security disability payments but did not disclose the millions of dollars of income he received from his victims, prosecutors said.
Prosecutors said Hanke also did not disclose the proceeds from the sale of an airplane or that he used the proceeds for personal expenses, including gambling and repairs to a close relative’s home, as well as $180,000 that was withdrawn in cash.
Hanke successfully worked to have his sentencing hearing delayed multiple times in the case.
Hanke’s attorney, Michael Schneider, first sought the delay in sentencing after saying Hanke and his physicians were considering implanting a feeding tube into the man’s stomach in anticipation of him becoming unable to swallow due to a narrowing of his esophagus.
FMC Rochester, where Hanke reported to, is a U.S. federal prison for male inmates requiring specialized medical or mental health care.
Schneider said Hanke was diagnosed with stage 4B squamous cell cancer of the oropharynx, which was treated aggressively with chemotherapy and radiation.
The treatment extended his life but left him with many serious physical problems that require constant surveillance and treatment, the attorney said.
“Mr. Hanke’s significant medical challenges and parlous physical condition ensure that any prison sentence imposed on him will not only be more punitive than the average defendant’s, but will also threaten his health, and perhaps his life,” Schneider argued in a sentencing memorandum where they asked for a non-incarceration sentence.
Schneider said in a new motion filed in March, just days before a rescheduled sentencing hearing, that he was seeking another delay in the hearing until after August 15.
The attorney said Hanke and his doctors decided it was necessary to insert a feeding tube into his stomach since it would soon be impossible for him to swallow nutrition.
Doctors also recommended that his gallbladder be removed. He was scheduled for the tube placement this past May and the surgery was likely to be scheduled 45 days after the tube insertion.
“An adjournment of sentencing is necessary to allow for the surgeries to be performed and for Mr. Hanke to learn how to receive nutrition through the tube prior to sentencing,” Schneider said.
Schneider said in an update in August that Hanke had recently been transported to the hospital by ambulance and found to have an abnormality in one of his carotid arteries.
During a status hearing on September 4, U.S. District Court Judge Ramon Reyes Jr. set the case for sentencing on October 2 and directed Hanke’s attorney to provide his client’s updated medical records, including a post-operative care plan concerning his feeding tube.
The judge sentenced Hanke at that October hearing to four and a half years in prison and ordered him to pay approximately $8.2 million in restitution.
Federal prosecutors called Hanke a “serial fraudster” who stole more than $8 million through a “brazen Ponzi scheme.”
Federal prosecutors said in support of their maximum prison time request that Hanke has failed to pay restitution and continued to commit fraud. “Simply put, Hanke has not been deterred.”