Former Bank Vice President Sentenced to Four Years in Federal Prison For Fraudulent PPP and EIDL Fraud Scheme

A former bank vice president in Wichita Falls, Texas was sentenced to four years in federal prison for a fraud scheme involving fraudulent Paycheck Protection Plan and Economic Injury Disaster loans, announced United States Attorney for the Northern District of Texas Ryan Raybould.

Kaylee Ree Lunn, 37, of Holliday, Texas, pled guilty to one count of wire fraud in July 2025 related to several fraudulent PPP loans she submitted in 2020 and 2021.  On Friday, December 5, 2025, Lunn was sentenced to forty-eight months’ imprisonment by Chief United States District Judge Reed C. O’Connor, who also ordered Lunn to pay restitution of $573,444 to the Small Business Administration and more than $19,000 to her former employer, Prosperity Bank (formerly First Capital Bank).

According to court records, Lunn admitted that, while she was vice president of commercial lending at the Wichita Falls branch of First Capital Bank, she accessed and unlawfully used the personal and business financial information of certain bank customers to apply for a series of four fraudulent PPP loans and a commercial loan in late 2020 through mid-2021.  Lunn admitted that she used false or inflated income and payroll expense figures and diverted loan proceeds totaling more than $276,000 to bank accounts she controlled, all without the customers’ knowledge or consent.  

Court records also reflect that Lunn applied for and received more than $140,000 in fraudulent PPP loans falsely reflecting the business entities as her husband’s.  Throughout this time period, Lunn also made failed attempts to obtain several Economic Injury Disaster loans of over $890,000, which were ultimately rejected because they were associated with fraudulent information. According to plea documents, Lunn spent thousands of dollars of the fraudulently-obtained loan proceeds on her personal and lifestyle expenses.

The investigation was conducted by the Federal Bureau of Investigation’s Dallas Field Office through the Amarillo Resident Agency.  Assistant United States Attorney Mark (“Mac”) McDonald prosecuted the case.