Does this constitute Bank Fraud? What can I do?

I purchased a vehicle through Nissan Motor Acceptance Corporation but with a very high interest rate. I went to a personal "small" bank in my city and myself, along with a co-signer, was able to get a loan (much lower interest rate) to pay off the vehicle through NMAC. Instead of sending the new bank the title, they sent me the title, clear, with no lien holders. Months later, I traded the vehicle for something else. Now the bank is saying that I sold their collateral and states I committed bank fraud. What can they do and what options do I have?