Former Wichita Falls bank VP sentenced for COVID-19 loan fraud

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A guard tower and razor wire at a prison in Texas. (Photo by Andrew Lichtenstein/Corbis via Getty Images)

WICHITA FALLS, Texas - A former bank vice president in Wichita Falls was sentenced to four years in federal prison for orchestrating a fraud scheme involving fraudulent Paycheck Protection Program (PPP) and Economic Injury Disaster (EIDL) loans.

Bank VP sentenced for fraud

Kaylee Ree Lunn, 37, of Holliday, Texas, was sentenced to 48 months' imprisonment on Friday, December 5, 2025, by Chief U.S. District Judge Reed C. O’Connor. Lunn pleaded guilty to one count of wire fraud in July 2025.

Lunn, who served as a vice president of commercial lending at the Wichita Falls branch of First Capital Bank (now Prosperity Bank), admitted to accessing and unlawfully using the personal and business financial information of bank customers to apply for fraudulent loans between late 2020 and mid-2021.

The backstory:

According to court records, Lunn submitted a series of four fraudulent PPP loans and one commercial loan. She used false or inflated income and payroll figures and diverted over $276,000 in loan proceeds to bank accounts she controlled, all without the customers' knowledge or consent.

Lunn also applied for and received more than $140,000 in fraudulent PPP loans that falsely listed her husband’s business entities. Additionally, she made unsuccessful attempts to secure more than $890,000 in fraudulent EIDL loans, which were rejected due to the associated false information. Lunn admitted to spending thousands of dollars of the fraudulently obtained funds on personal and lifestyle expenses.

What's next:

In addition to her prison sentence, Judge O’Connor ordered Lunn to pay $573,444 to the Small Business Administration (SBA), and more than $19,000 to her former employer, Prosperity Bank, as restitution.