(John Ransom/Townhall.com) – Our Lawyer-in-Chief, the brilliant Harvard law professor, has recently put on a symposium for us on investment law. It should be titled “How not to invest when saving/creating jobs with taxpayer dollars.”

Lawyer Obama apparently ignored a glowing, red legal flag when his administration decided to make what turns out to be a $527 million loan to a now-bankrupt solar energy company. The loan was part of a package made to struggling Solyndra, a solar company owned by a top contributor

to the president, as we reported previously on Townhall Finance .

Bloomberg revealed yesterday that the company’s independent auditor warned of substantial troubles at the solar company- troubles that threw its survival in doubt- even while the Department of Energy fast-tracked approval of the risky loan. It’s been speculated that the loan approval only came because of pressure from the White House.

The House Energy Committee has been investigating the loan for months. Sources with knowledge of the intentions of the House Energy Committee have said that the investigation into Solyndra has been the committee’s “number one priority” since February of 2011. Their focus shows that they believe some level of wrong-doing was committed high up in the administration in regard to the loans.

And the new revelations that have come from Bloomberg.com should not be reassuring to the president’s supporters.

“Two months before Obama’s visit” to Solyndra, writes Bloomberg

, “accounting firm PricewaterhouseCoopers LLP warned that Solyndra, the recipient of $535 million in federal loan guarantees, had financial troubles deep enough to “‘raise substantial doubt about its ability to continue as a going concern.’”

“People including our government put blinders on and did not want to believe in the obvious,” Jonathan Dorsheimer, an analyst in Boston for Canaccord Genuity Inc. of Vancouver, said in an interview with Bloomberg Government. “The fact that the government chose Solyndra as their white horse is mind- boggling.”

It’s only mind-boggling to those wondering why we don’t have jobs after the Obama administration spent a trillion dollars on job creation. Or to those people who expect that perhaps an administration that preached fiscal responsibility when campaigning for president might be able to pass a budget. Or perhaps to those wondering why the president couldn’t get just one vote- just one- in the Senate with his last budget proposal that had a huge $1.5 trillion deficit.

And this is the exact same administration asking for another $450 billion for shovel-ready projects?

Now, that’s mind-boggling.

However, it explains why the Obama administration has not been more forthcoming in producing documents that have been subpoenaed by the House Energy committee investigating the loans to Solyndra. The committee has issued subpoenas to the White House and the OMB for all documents related to the Solyndra loan. According to sources familiar with the production of documents, the administration has been dragging its feet even though the deadline to produce documents was July 21^st.

The committee will hold hearings on Wednesday when Solyndra CEO Brian Harrison is expected to testify. Likely he will say that the company disclosed all outstanding legal and financial issues to the administration before the loan was approved. Indeed, the “going concern” language tends to bolster that claim.

It’s language that is designed to insulate a company- and the auditor- from liability if bad stuff happens to investors when they decide to invest in a company after reading the “going concern” language. It’s also there to warn the public about the well-above average risk involved.

It would be hard for the administration to make the argument that they didn’t understand the risks involved, even if, as seems likely, they didn’t understand the risks involved.

The question then becomes is Obama a dupe like Ulysses S. Grant or corrupt like Warren G. Harding?

Just to be clear, in only a relatively small amount of cases is “going concern” language inserted into an auditor’s report prior to bankruptcy.

“A survey of the audit reports for 202 of the 257 publicly traded bankrupt companies that filed for bankruptcy in 2001 revealed that only 96 (48%) of these companies,” writes Elizabeth Venuti

in the CPA Journal, “contained a separate paragraph indicating the auditor’s doubt about the company’s ability to continue as a going concern.”

In other words, when an auditor says that they have substantial doubt about the ability of a company to operate as a going concern, they really mean SUBSTANTIAL.

While there is no clear definition of “going concern,” it generally means that the auditor has found that the company doesn’t have sufficient revenues to operate and will need an injection of capital to survive.

In that case, it’s unlikely that investors would be willing to bail out a company absent some sure-fire revenue stream or some other fungible asset -in which case they most likely wouldn’t have the “going concern” language issued in the first place. There are exceptions. But the best-case scenario for investors in this case would be to wait for the company to fail and buy the assets cheap later or secure the first place in line in order to set the market for a company.

That’s kind of “Vulture” Capital 101.

In fact, that seems to be exactly what happened to Solyndra, with Obama playing the part of the unwitting- or witting- dupe. See: Harding, Warren G.

Private investors spent $75 million in the winter on new investments in Solyndra in order to jump in front of the bulk of the government’s credit line in case of bankruptcy. That means that the government gave those investors permission to get paid prior to the bulk of the government-backed loan getting paid back.

And that means that the government was more than well aware that Solyndra was in trouble. But they were willing to try a Hail Mary pass to avoid embarrassing the president in the midst of the debt debate. Because from a financial point of view, it doesn’t make sense to give up first in line, as the government did, unless you are pretty desperate.

It also tells me that private investors think the company is worth about $250 million in a liquidation; nowhere near the $527 million it owes the government.

Desperate or not, it may not be long before Lawyer Obama will have to issue some “going concern” language of his own.