A former Wichita Falls bank vice president is headed to federal prison after admitting she tapped into customer data to pull off a pandemic loan scam. Kaylee Ree Lunn, 37, of Holliday, Texas, pleaded guilty to one count of wire fraud and was sentenced to four years behind bars, along with an order to repay hundreds of thousands of dollars tied to Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) applications submitted in 2020 and 2021.
How prosecutors say the scheme worked
According to court records reported by The Texas Lawbook, Lunn was serving as vice president of commercial lending at the Wichita Falls branch of First Capital Bank when she dipped into customer account and payroll information to file multiple fraudulent PPP and commercial-loan applications. Investigators say she inflated payroll numbers on the paperwork and steered loan proceeds into accounts she controlled, quietly diverting more than $276,000 without customers knowing or approving it.
Amounts, attempts and who was affected
Local reporting shows Lunn applied for and received more than $140,000 in PPP funds by falsely listing business entities as belonging to her husband, rather than the true owners. She also made unsuccessful attempts to secure EIDL loans totaling more than $890,000. KSWO reports that prosecutors say part of the money ultimately went toward personal and lifestyle expenses, not keeping businesses afloat during the pandemic.
Sentence and restitution
On Friday, Dec. 5, 2025, Chief U.S. District Judge Reed C. O'Connor sentenced Lunn to 48 months in federal prison and ordered her to pay $573,444 in restitution to the Small Business Administration, along with more than $19,000 to Prosperity Bank, the institution that absorbed First Capital Bank. The outcome, detailed in a press release from the U.S. Attorney's Office for the Northern District of Texas, closes a case built around falsified loan applications filed during the height of emergency federal relief efforts.
Investigation and prosecution
The FBI's Dallas Field Office, working through its Amarillo Resident Agency, led the investigation. Assistant U.S. Attorney Mark "Mac" McDonald handled the prosecution, according to public filings. In a Facebook post, FBI Dallas highlighted the sentence as part of broader enforcement against pandemic relief fraud, while The Texas Lawbook identified Lunn's defense attorney as Wichita Falls lawyer Dustin Nimz.
Legal notes
Lunn pleaded guilty to wire fraud, a federal offense charged under 18 U.S.C. § 1343. The statute carries a maximum sentence of 20 years in prison, with even higher penalties possible when the crime involves federal disaster relief money or a financial institution. The Legal Information Institute provides the full statutory language and penalty breakdown.
Local takeaway
Prosperity Bank, as successor to First Capital Bank, was awarded more than $19,000 in restitution for its losses in the scheme, according to prosecutors. The case lands as a pointed reminder for Wichita Falls businesses and bank customers that pandemic relief programs became a target-rich environment for fraudsters and that carefully tracking account activity and credit remains a must, even years after the emergency programs rolled out.
