Former Owner of Sunset Motors Pleads Guilty to Fraud : Law: Irvine-based RV dealer William P. Whitledge Jr. admits to bilking three banks of $2.8 million.

The former owner of now-bankrupt Sunset Motors, once the leading West Coast dealer of recreational vehicles, pleaded guilty Monday to bilking $2.8 million from three community banks.

William P. Whitledge Jr., whose $50-million network of RV sales stretched to Seattle and included such celebrity customers as actor Tom Cruise, admitted that he used RVs as collateral for loans when the RVs already backed other loans and when he didn’t own them or sell them.

Evidence gathered by the FBI and federal prosecutors showed that Whitledge was trying to prop up a company that was faltering during the recent recession, Assistant U.S. Atty. Elana S. Artson said.

The hardest hit of the three banks defrauded was struggling Bank of Newport, which lost nearly $2.1 million to Whitledge’s inventory financing fraud. Separately, the bank was defrauded of $4.5 million in a subsequent unrelated equipment leasing scheme.

Whitledge obtained lines of credit from the Newport Beach bank, Bank of Yorba Linda and Pacific Business Bank in Carson to finance his inventory of expensive motor homes. Sunset Motors was required to provide the banks with various documents, including ownership records and statements that the vehicles were free from all other liens.

But from March to mid-December, 1992, Whitledge drew on his lines of credit by providing the required documents on 16 motor coaches that had already been pledged to other lenders or had already been sold. In one case, prosecutors charged, he created a false sales contract to obtain loan money.

The banks lost money on the loans after the RVs were sold or repossessed by the original lenders.

Whitledge faces 30 years in prison and a $1-million fine at his sentencing, scheduled for Oct. 17 before U.S. District Judge Linda H. McLaughlin in Santa Ana.

While Whitledge was trying to keep his enterprise afloat in 1992, he was telling the city of Fountain Valley and the news media that he was surviving the recession in fine fashion by selling motor homes ranging in price from $50,000 to $450,000. The city was trying to attract the Irvine company to a lot fronting the San Diego Freeway.

The high-priced luxury coaches came with marble floors, microwave ovens, built-in bars, ice makers, coffee makers, oak cabinets, leather sofas, wallpapered bathrooms and satellite dishes.

Besides listing actor Cruise as a customer, Sunset Motors said it sold its custom coaches to former California Angels baseball stars Rod Carew and Bert Blyleven.

In an effort to survive, Sunset Motors consolidated offices and cut costs, but the slow sales from the recession finally sunk it. If filed a bankruptcy petition last year.