Green’s Dictionary of Slang

paper hanger n.

also paper-layer
[paper n. (10) + pun; note Sutherland, The Professional Thief (1937), claims that this is a term used only by amateurs, never by professional thieves]

1. (US Und.) one who habitually passes bad cheques.

[US]Whip & Satirist of NY & Brooklyn (NY) 9 Apr. n.p.: When she has any more paper hanging to do she had better send for him.
[US]Criminal Life (NY) 19 Dec. n.p.: John Watson [...] can make more money by paper-hanging than playing penny-ante.
[US]Number 1500 Life In Sing Sing 261: I went to the coast with a mob of paper-layers, but graft was on the fritter.
[US]Jackson & Hellyer Vocab. Criminal Sl. 101: Whoever thoughtlessly leaves his check book in accessible places incurs the jeopardy of [...] personal loss, seeing that ‘paper hangers’ are vigilant in the search for these.
[US]Ade ‘The New Fable of the Lonesome Camp’ in Ade’s Fables 258: All the wise Paper-hangers and the fly Guitar Players had him marked up as a Noodle.
[US]G. Henderson Keys to Crookdom 133: There are expert ‘paper hangers’ and ‘greenhorns.’ The experts generally are jail birds who have studied the game carefully.
[US]Rocky Mountain News (Denver) 13 Nov. in AS III:3 254/1: Paper layer—Swindler.
[US]N. Kimball Amer. Madam (1981) 175: Call a scratcher or paper hanger, he can copy any signature.
[NZ]G. Meek ‘London’ in Station Days in Maoriland (1952) 100: I might have had a paperhanger murd’re on me’ track.
[US]Goldin et al. DAUL 152/1: Paper-hanger. One who issues or passes worthless checks. [...] Paper-layer, or -pusher. See Paper-hanger.
[US]W. Burroughs Naked Lunch (1968) 136: You are only being the most notorious paper hanger in Greater Mecca.
[US] ‘Sporting Life’ in D. Wepman et al. Life (1976) 161: There’s the blow-up bang and the paper-hang / Where some poor chump gets beat.
[US]K. Burkhart Women in Prison 448: Paperhanger Person who writes bad checks.
[UK]J. Morton Lowspeak.
[UK]P. Theroux Kowloon Tong 135: They were all paper-hangers, the Chinese in Hong Kong, check-kiters and price-grubbers and pay-gougers.
[UK]L. Pizzichini Dead Men’s Wages (2003) 224: This one involved interceding with the Fraud Squad on behalf of a Mafia ‘paperhanger’ turned supergrass.
[Aus]B. Matthews Intractable [ebook] The professional crims – the tank men and the kite flyers or paper hangers.

2. (US) one who distributes free passes and/or cheap tickets to failing theatrical shows [paper n. (3)].

[US]W. Winchell On Broadway 2 July [synd. col.] ‘The Paperhanger’ — an old press agent [...] if you’ve got a flop show he can fill the house with ‘paper’ customers (passes and 50c) on six hours’ notice.

In derivatives

paperhanging (n.)

passing bad cheques, forgery.

[US]H. Yenne ‘Prison Lingo’ in AS II:6 280: When you first come in contact with an inmate he will probably tell you he is ‘doing time’ for ‘paper-hanging’ (forgery).
S.F. Examiner (CA) 27 June 13/1: Fall For Paper Hanging — Forgery conviction.
[US]J. Blake letter 20 Nov. in Joint (1972) 108: He’s in for paper-hanging, what else.