In Liberty Nat. Bank v. Aetna Life &c. Co., Liberty Nat. Bank v. Aetna Life &c. Co., 568 F. Supp. 860 (N.J. 1983) the plaintiff bank made two loans -- one to Edward Vaughn and one to Vaughn's mother. As security for the loans, Vaughn gave the bank two certificates of deposit (CDs) purportedly issued by National Bank of Commerce, Ltd., an entity which had no assets. Vaughn and his mother subsequently defaulted on the loans, and the CDs proved to be both forged and worthless. The insurer denied coverage of the bank's claim under a blanket policy similar to that at issue herein. The court granted summary judgment to the insurer reasoning that: The bond insures that the documents submitted to the bank in connection with a loan are genuine and authentic. If they are not, and a loss is caused thereby, the bonding company guaranteed the loss. On the other hand, the bonding company does not guarantee the truth of said documents. If they are not truthful, and a loss results therefrom, it is not guaranteed. The allocation of such losses undoubtedly arises from the practicality of the situation. A bank cannot protect against counterfeit and forged documents. It can, on the other hand, investigate the assertions made therein through credit checks, appraisals, title searches, financial statements and the like. Id. at 863. See also KW Bancshares v. Syndicates of Underwriters at Lloyd's. The court determined that the bank's loss was not caused by the lack of authenticity or genuineness of the documents. On the contrary, the loss was caused by the fact that the statements contained in the documents were not true. The assets represented thereby did not exist. If the documents were authentic and their signatures genuine and authorized, the loss nonetheless would have occurred. The failure of the security was not because they were counterfeit or forged, but solely because the assets purportedly represented thereby were non-existent. This loss falls upon the Bank and not the bonding company by the terms and intent of the bond. Liberty Nat. Bank, supra at 863.