Bad commercial paper is just a fancy name for bad checks or worthless stocks. A claim I just handled provides a nice example.

HAWK Investments engaged my agency to collect on a $500,000 loan to a "dummy" corporation called Slam Pictures. HAWK is a consortium of venture capitalists looking for interesting "opportunities." Slam Pictures consisted of Robert (pronounced Roe-bear) Scully and his five associates.

Robert had lured these associates (former army buddies) into a get-rich-quick movie deal, promising each of them huge monetary rewards for co-signing on a $500,000 loan to Slam Pictures. With the backing in place, HAWK Investments gave the half-million to Robert.

The ostensible goal was to complete a flick titled "The Mayo Truck," involving two beautiful sisters named Mayo who have to deliver a bunch of mayonnaise. No joke.

Normally loans such as these are uncollectable because the dummy corporations are designed to collapse to protect the principals when they misuse or abscond with fraudulently obtained funds. Lenders are left to contend with an empty corporate shell. However, as I said, Robert's associates had personally guaranteed the loans. Their asses were completely on the line. Although Robert's credit was, and always had been, in question, the guarantors' credit was solid and HAWK made the loan on that basis.