Topic: Scammer tag: PatrickHarnett - page 8. (Read 39244 times)

+1.  That one is a pretty clear-cut case of fraud/scamming, more so than this current thread.

How did the people who deposited with him cause harm? Yes mistakes were made all around, but Patrick's mistake was the only one that resulted in a loss of other people's money, which he promised to repay on demand.

I am not exactly sure are you here claiming the Patrick understood this in his heart or did not. In other parts you are clearly claiming that at least some people understood these problems and publicly discussed them on this forum and you link their understanding very strongly to Patricks understanding of the situation. Either Patrick did infact understand these fundamental problems or at least should have understood them as they were presented to him. In neither of these cases it is acceptable to publicly post claims to the contrary in the attempt to get money flowing in, probably from the more stupid part of the audience and if somebody does that he deserves a scammer tag.

Some other kind of argument about the case was that Patrick was operating an honest to good solid business with all the best intentions and did not have any clue there might be big problems and everything just came as a total surprise from blue sky to him later. I might understand how somebody could argue about this not deserving a scammer tag, but in this case also the lenders were totally without fault to themselves and the reason the loss should be shared is that everybody was without fault of any kind. However this does not seem like the argument any more in the last reply.

I find the lenders stupid and think they are also at fault to the losses but I don't buy the theory that it is okay to separate money from the fools. This lenders stupidity and fault is totally separate issue from scammer tag to Patrick. In similar way I find the people falling to Nigerian scammers stupid and at fault of losing their money, but the Nigerians are still scammers.

About the people that borrowed money from Patrick, I know nothing of their actual status, so I am not making any claims about them. I am not even sure whether they exist in how big numbers or what is the actual route how money disappeared to pirate or where. Everything is possible in here. I think the probability is great that there are also good candidates for scammer tag in there. The pirate case was a gift from sky to many scammers and I would be very suprised if all losses that are said to be be because of pirate, are actually losses to pirate.

Well, these other people just keep on running right in front of the swinging bat.

Now, the question is, who's at fault here: The guy swinging the bat or the guys running into the bat's arc yelling "Hey, maybe you shou*OOOMF*?"

Was this thread about PH ? Or just bait to bash other people?

So we're up to what, Joel the Shill repeating his baseless, completely destroyed, false claim for the 48th is it time? And a couple more people added to the list?

Theymos&co, stop fronting for scammers. It washed (somehow) in the GLBSE case. It won't wash forever.

In general, yes, but that didn't actually happen in this case. At least, I very much doubt it did. If anyone wants to come forward and say they considered Patrick an expert on risk assessment and took his ratings seriously, I'll reconsider.

If someone did rely on that and can make a case that there reliance was reasonable under the circumstances, that would certainly weigh towards assigning more liability for losses to Patrick. To divide the loss, you have to look at the facts and circumstances of each individual loan. I doubt that was a factor in the loan that started this thread, but who knows.

In an ideal world, maybe that should have been the case. But in this world, it simply wasn't.

Perhaps it makes no sense, but it was in fact true. Patrick's business model and methods weren't a secret. They in fact *did* understand Patrick's business model well enough to make the judgment. If you look, you'll find some of Patrick's lenders arguing about this very issue in this very forum.

If so, why can't Patrick take what his borrowers told him at face value and rely on that? Patrick made precisely the same mistake those who loaned him money did. You're excusing his lenders but not excusing him.

I'm not sure I know what you mean by "assumptions". But the mistake was fundamental and inherent in the business model and lending environment. The mistake was failing to realize two things:

1) There's no way to enforce these loans in any court of law. That means if people have any reason not to repay, they won't repay. Many people won't sacrifice their real-world lifestyle and bank accounts to repay a bitcoin loan that can't be enforced anyway.

2) Borrowing from Patrick to invest in Pirate just seemed like too good a deal, especially since people knew they could just default on Patrick without consequences. No method would prevent this, short of actually tracking what each person did with the bitcoins, which nobody would agree to.

This is why Patrick's business failed. And there is no argument you can make why Patrick should have known this that doesn't equally apply to those who loaned him money.

(And, again, this doesn't apply to Kraken, which I think was likely an outright scam.)

Yeah, Joel you should read up on the economics of liability law. This is very clear cut and for some unknown reason you are trying to confuse the issue.

The cherrytruck case is not a good analogy because in that both the buyer and the seller and indicated to have equal sighting of the truck. A better analogy would be if only the seller has seen the truck and he tells the buyer that "I have seen a truck that holds 1500 pounds of cherries. Would you buy the 1500 pounds of cherries from me? The contract is only written to mention 1500 pounds of cherries in this analogy and not to mention the truck at all as the pirate exposure was not written into the contract in real world situation either. I assume this truck is supposed to be an analogy to the pirate risk?

Actually the cherrytruck analogy could be made even better analogy by saying that the seller says "I have seen a truck with 1500 pounds of cherries and I know because I am an expert of cherrytrucks and I also publicize ratings of how much cherries each truck carries". This is of course analogy to the credit ratings that Patrick was also making and so claiming to be an expert of risk assessment.

Would it be reasonable for some normal people to assume that somebody who runs a business has more intimate knowledge of risks associated with the business than some external party especially when the person running the business is also claiming to be a specific expert on risk assessment?


This is critical difference. They did not make the same mistake and especially not in the same way. Patrick should have been in a position to much better understand what is happening in his business. It makes no sense to say the lenders should have understood Patricks business enough and in same detail avaliable to Patrick to be able to make the judgement. Patrick on the other hand should have understood these issues and in the case he does not he should not have made claims about them or pay if they are false. It is much more sensible to say that some lenders should be able to take what they are being told at face value and rely on that.

Each of the lenders have their own set of assumptions. I would not even claim that two different lenders did the very same mistake the very same way.

Of course not. Someone who commits fraud can't blame those who believed him! In this case there is no common mistake, there are two different mistakes. Also, one party is committing fraud on the other party and the other isn't, so there's no equality of blame between the parties. So these aren't even remotely analogous. (However, both parties in this case did more or less equally defraud PayPal, for what that's worth. This is more like the classic 419 scam. It's fine to blame the victim for falling for a 419 scam, but it's important not to let that in any way excuse the fraudsters.)

The big difference is that in the case of Patrick and those who loaned him money, they *didn't* both know the risk. They *both* believed the risk that actually harmed them didn't exist. If you read the transcript, they agree that Patrick's business model provides him sufficient equity in his loan portfolio to cover losses associated with a Pirate default. They either didn't understand or didn't appreciate the significant *indirect* Pirate exposure the portfolio had. If either of them had realized this, the agreement would never have taken place. The critical difference is that they both have the same culpability for making the very same mistake in the very same way.

@Joel. Here's a question. Please take a look at this thread (it's really short): https://bitcointalksearch.org/topic/--124195

Would you argue that the alleged scammer in that case should not be scammer tagged, because the affected victim knew of the risk of this happening with Paypal transactions?

https://bitcointalksearch.org/topic/patrick-harnett-kraken-fund-124152  I started a scam accusation concerning Kraken fund. If anything is a slam dunk case of fraud that would be it.

My bad.

The part MPOE-PR quoted isn't AugustoCroppo's words, but it was AugustoCroppo's words that my comments were referring to. They can be read behind the link.

The contract doesn't "require" 1,500 pounds, it *assumes* 1,500 pounds. There are not 1,500 pounds. Similarly, this agreement didn't require Patrick's loan portfolio to be free of significant indirect Pirate exposure, it assumed that it was.

That's correct. If there is equal fault on both sides, then the losses have to be split somehow. To make your example perfectly analogous, say it's 1,500 pounds of cherries that are purchased. By mistake, the seller only loads 1,200 pounds of cherries on the truck and also by mistake, the buyer erroneously confirms there are 1,500 pounds of cherries on the truck even though there aren't. In that case, they have to fairly split the damage from their common mistake. It's inequitable to make the buyer pay for 1,500 pounds of cherries and take 1,200 just because he mismeasured given that the seller mismeasured too. But it's also inequitable to make the seller cover 100% of the damages from the incorrect loading given that the buyer made the same mistake. You have to come up with some fair way to split whatever damages flow from the common mistake in measuring the loading of the cherries.

They didn't "make a claim to deliver 1,500 pounds for $3,000". Please read it over again. They agreed to deliver "the 1,500 pounds of cherries we agree are in the truck", something that does not exist.

And common mistake has to hold in pretty much every jurisdiction. There is no other choice in cases where the contract is premised on a common mistake. In the example of the common mistake about the quantity of cherries being sold., you can't make the seller deliver and the buyer accept the 1,500 pounds of cherries in the truck because there are no 1,500 pounds of cherries in the truck. "Enforce the contract as agreed" is ambiguous because it could equally well mean the buyer has to take whatever is in the truck even if it's not 1,500 pounds or the seller has to put more cherries in the truck -- and neither is what they agreed on. And even if you did enforce the contract as agreed, if that doesn't split the harm equitably, one party would have a cross-claim against the other that you'd have to resolve anyway.

Generally, common mistake applies if the contract is about something that doesn't actually exist or doesn't exist as contemplated in the contract whereas cross-claim is used when it's possible to enforce the contract as agreed yet that leaves one side harmed by the other's mistake even where the mistake is common. To an extent, common mistake is redundant. If execution of the contract as agreed is impossible, you don't need common mistake to invalidate it. If execution of the contract is possible despite the mistake, the common mistake would constitute a cross claim anyway.

This case is on the border somewhere -- it's hard to tell whether it's possible to enforce the contract "as agreed" because the terms are insufficiently precise. This is one of the huge advantages of written contracts over verbal ones. If something unexpected happens, the written contract usually gives you a resolution. However, it often also tends not to be a fair resolution. (For example, in the case of the misweighed cherries, the contract likely would say that the seller's written acceptance of the load waives claims that cherries were insufficient. Though this is a precise resolution, it's hardly fair to let the seller 100% benefit from his mistake while the buyer bears the full costs.)

Here's an interesting thought experiment: Say in that discussion, Patrick was asked this question: "Say it turns out that despite your best efforts, lots of people are borrowing from you to invest in Pirate. And say Pirate stops making payments and many of your loans go bad all at the same time. You probably can't enforce them in any court of law, so your chances of collecting on many of those loans would be low to non-existent. If that happens, are you and your wife going to make personal financial sacrifices to pay back all your investors 100%? This is a serious question and if this happens, I plan to hold you to what you say now and make it a term of our agreement. What will you do?"

What do you honestly think his answer would have been?

That part is a quote of a previous comment and do not appear to be Augusto's words. I also fail to see how it is relevant to the current issue at hand: How should the situation be dealt with?

I think Patrick is responsible for repaying everyone who invested in his bank.  It doesn't matter what the cause of the bank's problems were so long as he guaranteed the deposits.

So long as he didn't setup an official corporation with limited liability, morally and legally he is responsible.

No. It might not have been on the contract but if he claimed there was 1500 pounds verbally and there is not 1500 pounds, one could contest the contract for misrepresentation, regardless if the seller knew he was wrong or not, he made a claim and that claim should be honored. If the seller cannot honor the contract which requires 1500 pounds, he cannot either refund it partially either and share loss. Since he cannot deliver, he cannot keep/void any part of the $3000 which cannot be either given to seller as part of the contract.

Let me rephrase your example:
A company creates a product which they claim to be packaging and selling in packs of 4. Someone buys the packaging also believing there is 4 items per pack and it's shipped to them. The buyers and the company realize there was an error and only 3 items are inside each pack.

Company to buyers: "Sorry, common mistake, we both believed there was 4 products included but we couldn't deliver what we claimed and you believed it. We're just as much at fault for that now that it's shipped and we paid for packaging and delivery. Since we both made that mistake on assumption of the package's content and we can't undo those shipments, it would be fair to share the loss."

Your proposal would not hold in any jurisdiction that I know of. If they made a claim to deliver 1500 pounds for 3000$, they would have to deliver what was claimed or otherwise refund the money which was given based on the claim they would receive 1500 pounds which didn't occur. If someone doesn't deliver upon his claims, he's always at fault for making claims he could not deliver on, not the ones believing their claims. Although maybe you simply do not agree with the common practices. Which would be fair enough, everyone is free to have their opinion.