In 1987, Walker was charged with Federal bank fraud based on two loans. A private contractor borrowed $279,000 from First American to build schools. Walker later personally borrowed $45,000 from that individual on a "handshake" basis. Those two loans ("borrowing from a borrower" while serving as a director) constituted bank fraud. Walker agreed to a plea bargain with Federal prosecutors; he pleaded guilty to bank fraud in the loan, perjury (based on dealings by the Association with his son), and filing false financial statements. He was sentenced to four years imprisonment for bank fraud, three years for perjury, and probation for false financial statements; the sentences to be served consecutively.