Wichita Falls, Texas, January 5, 2026
Kaylee Ree Lunn, a former vice president of commercial lending at First Capital Bank, has been sentenced to four years in federal prison for her role in a fraud scheme involving fraudulent Paycheck Protection Program loans. Lunn unlawfully accessed bank customer information to secure five loans totaling $276,000, which she diverted into accounts under her control. She was also ordered to pay over $573,000 in restitution. This case highlights ongoing issues of financial fraud within the Texas banking industry.
Wichita Falls, Texas – Former Bank Executive Sentenced to Four Years for Fraud Scheme
Kaylee Ree Lunn, a 37-year-old former vice president of commercial lending at First Capital Bank in Wichita Falls, Texas, has been sentenced to four years in federal prison for wire fraud. She was also ordered to pay restitution totaling $573,444 to the U.S. Small Business Administration and over $19,000 to Prosperity Bank, formerly First Capital Bank.
Details of the Fraud Scheme
Between 2020 and 2021, Lunn unlawfully accessed personal and business financial information of bank customers to apply for five fraudulent Paycheck Protection Program (PPP) loans. She diverted $276,000 from these loans into bank accounts under her control without the customers’ knowledge. Additionally, Lunn attempted to apply for Economic Injury Disaster Loans exceeding $890,000, though these applications were ultimately rejected. The funds obtained were used for her personal expenses.
Legal Proceedings and Sentencing
Lunn pleaded guilty to one count of wire fraud in July 2025. At her sentencing, Chief Judge Reed O’Connor of the Northern District of Texas emphasized the severity of her actions, leading to the four-year prison term and restitution orders. The case was investigated by federal authorities, highlighting the ongoing efforts to combat financial fraud within the banking sector.
Background on Financial Fraud in Texas
This case adds to a series of financial fraud incidents in Texas. For instance, in 2015, Kirk Smith was sentenced to 36 months in prison for defrauding seven Houston-area banks of over $2 million through a check kiting scheme. Similarly, in 2014, Leopoldo Parra was sentenced to 87 months in prison for defrauding the Export-Import Bank of the United States of approximately $13.6 million. These cases underscore the persistent challenges in addressing financial fraud within the state’s banking industry.
Impact on the Banking Community
The sentencing of Lunn serves as a stark reminder of the critical importance of ethical conduct and vigilance within the banking sector. Financial institutions are continually working to enhance their internal controls and compliance measures to prevent similar fraudulent activities. The case also highlights the necessity for robust oversight and the role of federal authorities in maintaining the integrity of financial systems.
Conclusion
The conviction and sentencing of Kaylee Ree Lunn reflect the serious consequences of financial fraud and the commitment of the judicial system to uphold justice. It also serves as a cautionary tale for individuals in positions of trust within the banking industry, emphasizing the need for unwavering adherence to ethical standards and legal obligations.
FAQ
What was Kaylee Ree Lunn convicted of?
Kaylee Ree Lunn was convicted of wire fraud for unlawfully accessing customer financial information to apply for fraudulent Paycheck Protection Program (PPP) loans.
How much restitution was ordered in this case?
Lunn was ordered to pay restitution totaling $573,444 to the U.S. Small Business Administration and over $19,000 to Prosperity Bank, formerly First Capital Bank.
What was the duration of Lunn’s prison sentence?
Lunn was sentenced to four years in federal prison for her role in the fraud scheme.
What other financial fraud cases have occurred in Texas?
Other notable cases include Kirk Smith’s 2015 conviction for defrauding Houston-area banks of over $2 million and Leopoldo Parra’s 2014 conviction for defrauding the Export-Import Bank of the United States of approximately $13.6 million.
What impact does this case have on the banking community?
The case underscores the importance of ethical conduct and vigilance within the banking sector, highlighting the need for robust internal controls and compliance measures to prevent fraudulent activities.
Key Features of the Case
| Feature | Details |
|---|---|
| Defendant | Kaylee Ree Lunn |
| Age | 37 |
| Position | Former Vice President of Commercial Lending at First Capital Bank, Wichita Falls |
| Fraudulent Activities | Applied for five fraudulent PPP loans; diverted $276,000 into personal accounts; attempted to apply for over $890,000 in Economic Injury Disaster Loans |
| Restitution Ordered | $573,444 to the U.S. Small Business Administration; over $19,000 to Prosperity Bank |
| Prison Sentence | Four years in federal prison |
| Case Significance | Highlights the ongoing issue of financial fraud in Texas and the importance of ethical conduct in the banking sector |
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