A former bank executive in Wichita Falls was sentenced to four years in federal prison for a fraud scheme involving illegally obtained pandemic relief funds.
Kaylee Ree Lunn, 37, of Holliday, Texas, pleaded guilty to one count of wire fraud in July and was sentenced Friday by Chief Judge Reed O’Connor of the Northern District of Texas.
Lunn was also ordered to pay restitution of $573,000 to the U.S. Small Business Administration and more than $19,000 to Prosperity Bank, formerly First Capital Bank, where she had been vice president of commercial lending at the bank’s Wichita Falls branch.
According to court records, Lunn admitted using financial data of bank customers in 2020 and 2021 to apply for bogus loans under the federal Paycheck Protection Program, which provided forgivable, federally backed loans to help struggling businesses stay afloat during the Covid-19 pandemic, and a second government initiative, the Covid-19 Economic Injury Disaster Loan program, which provided funds to help businesses recover from the economic impacts of the pandemic.
Lunn acknowledged that she diverted loan proceeds totaling more than $276,000 to bank accounts she controlled without the customers’ knowledge or consent. In addition, she applied for and received more than $140,000 in fraudulent PPP loans for businesses falsely purported to be her husband’s. And she made failed attempts to obtain several EIDL loans totaling more than $890,000. These were rejected, investigators said, because they were associated with fraudulent information.
Lunn is represented by Dustin Nimz of Wichita Falls.
The lead prosecutor is Mark McDonald of the U.S. attorney’s office in Fort Worth.
The case is 7:25-cr-00016-O.