Topic: Scammer tag: PatrickHarnett - page 9. (Read 39315 times)

Of course, but that's not even remotely analogous because there's no agreement between the two drivers.

Let me try it one more time: Say two people each, through equal fault, believe there's 1,500 pounds of cherries in a truck. They each have no doubt this is true, even though there is actually 1,200 pounds of cherries in the truck. In this context, there is no difference to them between "the cherries in the truck" and "the 1,500 pounds of cherries in the truck", because they both believe there are 1,500 pounds of cherries in the truck. Now, say one agrees to sell the [1,500 pounds of] cherries in the truck to the other for $3,000. Then, they discover there isn't really 1,500 pounds of cherries in the truck. What do you do?

One can argue that the contract said $3,000 for the cherries in the truck, so he's still owed $3,000. The other can argue that there should be 1,500 pounds of cherries in the truck, as agreed, as the other guy should add cherries to the truck.

This is a case of common mistake -- a contract premised on a shared mistaken belief without which neither party would have entered into the agreement and which is central to the agreement. In this case, you can't enforce the contract as agreed because the contract "as agreed" requires there to be 1,500 pounds of cherries in the truck.

This contract was about Patrick's loan portfolio and the characteristics of that portfolio were central to the contract. We now know that this portfolio did not exist in the form the parties believed it did. It's just like the truck not having 1,500 pounds of cherries in it.

Both parties believed Patrick's loan portfolio was largely free of Pirate exposure and free of correlated risk. The parties entered into an agreement premised on that mistaken belief without which neither of them would have entered into the agreement. The contract simply could not have said what should happen if it turns out there's significant correlated risk because neither party believed that was possible.

Here it is as plain as day, mistaken assessment and agreement with that mistaken assessment:

Aug 10 08:10:17   in the event BS&T goes bust, I have more than enough assets to cover that
Aug 10 08:10:41   mainly because the 15,500 coins I hold on deposit are not invest in BS&T
Aug 10 08:10:56   well that works. i'd like to put 500 bitcoins with you

This is, of course, invalid reasoning. There's indirect Pirate risk even if funds are not invested in BS&T. This is a mistake both parties equally made. Note that they never went on to discuss what would happen in case they were both incorrect and that somehow a Pirate default did cause his equity to drop too low to cover the loans. They wouldn't have because neither thought this would happen. And this wasn't due to fraud or deceit, both parties were simply mistaken.

I see. However:

He made claims, depositors accepted them. It does not make the depositor partially responsible if the claims were wrong. Patrick was the only one making the verification and was being extended money not as investment but as a loan.

Isn't the premise of granting any business loan based on the belief that the borrower's assessment/business plan is sound and sufficient to guarantee the loan? (Unless you're lending based on trust of someone you know.)

Your proposition would come to the conclusion that unless you don't make any investigation before loaning the money to someone, the lender is always as much at fault as the debtor and should share the loss, because as soon as you know any claim by the borrower upon which you accept to extend them the funds, you're at fault as much as the borrower for being mistaken on the borrower's claims?

As such, to not share losses when loaning with the borrower, never investigate the borrower's need for the fund and current financial situation?

Patrick made a claim and was mistaken. The lenders were mistaken in that Patrick could execute and ran his business as he claimed he would. I'm in no way claiming he did it on purpose. But the fact his business plan did not work as expected does not put the lenders at fault for acknowledging his business plan appeared to be sufficient. This is the whole difference between buying equity in a company and extending fund based on claimed business plan. Equity is shared profit/loss, extending fund, losses are wholly on the shoulders of the borrower.

Where do you come up with this?

If I am speeding down the freeway, behind another car that is speeding down the freeway, I am not at fault if that driver gets in an accident due to driving at an excessive speed.  And at the same time that driver is not at fault if I get in an accident due to driving at an excessive speed.

Not precisely. It's just as much the depositor's fault because they drew substantially the same conclusion with substantially the same information.

If the circumstances were analogous, the result would be analogous. If the circumstances were not analogous, the result would not be analogous. To make this more analogous, those loaning the money would have to agree that the mining farm would produce enough revenue to pay back the loan and agree to the loan only because they agree with that assessment. And you'd need the fault in the erroneous assessment to be evenly split between the parties. In that case, as in this case, the lender's incorrect assessment harmed the borrower just as much as the borrower's incorrect assessment harmed the lender.

It wasn't a co-venture. It should not be considered as a co-venture. It was, however, a contract based on a common mistake.

I agree that that's the first step. But then the next step is to look at whose fault the loss was. To be ridiculous, if the investors loaned money to build a factory and then burned down that factory, clearly the damages from burning down the factory would offset the repayment of the loan. In this case, there is some fault on the part of the investors that offsets the repayment because it harmed the borrower. (These are actually two slightly different ways to look at the same thing. You can view common mistake as akin to shared fault, but conceptually it's a bit different.)

I agree, but that's irrelevant. I'm not arguing that the contract was a co-venture or investment. I'm arguing that the contract was premised on a common mistake.

I am not arguing that the terms of the contract specified a share of the losses. I'm arguing that the losses occurred because of a mistake and the harm from that mistake should be born by those who made the mistake and caused the harm.

I did. I argued that this case is different because both Patrick and those who invested with him made precisely the same mistake.

This is not a case of a bank making bad investments while its depositors had a reasonable expectation that it would make good investments. This is a case where both Patrick and those who invested with him made precisely the same mistake -- given his business model, there's nothing Patrick did wrong (until the Kraken fiasco). He just picked a lousy business model to invest in, just as his investors did. I don't know what else I can say other than to keep repeating myself because these are points I've already responded to. (You are, of course, welcome to respond to my responses.)

Patrick and those who lent money to him belived that Patrick would have sufficient funds in his loan portfolio to cover deposits in the event of a Pirate default. But he did not. This was not through any particular fault of Patrick's that wasn't shared with those who loaned him money.

Aug 10 08:06:31   listen i actually wanted to talk to you.
Aug 10 08:06:38   hi
Aug 10 08:06:54   hey. your deposits still bs&t free ?
Aug 10 08:07:21   I run a slightly complicated business, but most of the deposit accounts I run are BS&T free
Aug 10 08:07:39   that's what the market wanted
Aug 10 08:07:58   you deem yourself able to repay your depositors in the event bs&t goes bankrupt, and nothing is recovered ?
Aug 10 08:08:00   back in a couple of minutes - grabbing a glass of wine - friday evening here
Aug 10 08:09:57   back
Aug 10 08:10:17   in the event BS&T goes bust, I have more than enough assets to cover that
Aug 10 08:10:41   mainly because the 15,500 coins I hold on deposit are not invest in BS&T
Aug 10 08:10:56   well that works. i'd like to put 500 bitcoins with you

Patrick is arguing that because of his business model, he would have sufficient assets to cover his borrowed funds even if Pirate defaults. Those who loaned him money agreed with this assessment. Whether it was inevitable given his business model or Patrick just suffered bad luck or what have you, Patrick and those who loaned him money agreed on a set of circumstances which formed the basis for the loan, a key one of which happened to be incorrect, without which neither party would have entered into the agreement.

I don't know how it could be clearer: "well that works. i'd like to put 500 bitcoins with you".

You didn't acknowledge or argue against this logic. That unlike your example, deposits did not constitute an investment in Patrick business, but a deposit just as a bank. Your examples always shows:

Investors > Funding of a business > Profit or loss shared among investors

While this situation is:
Patrick creates a business under his own name for accepting deposits and then re-lending at a higher rate for a profit.
Depositor > Patrick (bank) > Lendee > Investment or Personal Purchase

Depositors are actually entrusting the bank for safekeeping of deposits as well as receiving a small interest from the financial service provider (Patrick Harnett). The money is not invested, it is entrusted. The only thing people knew about their deposit is that:
- Patrick would loan the deposits to others.
- Patrick would pay them an interest on deposits.
- Patrick would investigate lendees.
- Patrick was not exposed to a ponzi.

Which are basically the same you'd expect and know when depositing in a bank. You agreed that depositors at a bank are rarely at common fault for the bank's bad investments and everything seems to point that the situation is very similar to deposits at a bank. You know just as much when depositing at a bank yet you do not accept any risk other than the bank declaring bankruptcy. In this case the bank is Patrick Harnett himself and he did not declare bankruptcy. He just voided partially the deposit amounts and said he'd pay deposits if he manage to get something back.

The point is that it was no secret what Patrick was doing or how he believed he was protecting himself from Pirate exposure. There's no evidence that Patrick didn't do what he said he was doing or that there was anything he could have or should have done differently (other than changing his business model). Whatever you believe is the reason he actually did have huge Pirate exposure, there's nothing to suggest that Patrick is any more at fault for that than those who loaned money to him -- they also had unexpected indirect Pirate exposure just like Patrick did. Both Patrick and his investors made precisely the same mistake and caused precisely the same harm in precisely the same way.

(Note that the above does *not* apply to Kraken or any funds taken after Pirate was in default.)
That's not true. Patrick's business model and practices were not secret, and there's no evidence whatsoever (and it totally defies common sense) to argue that what Patrick was doing was basically sound and Patrick just didn't quite say the right magic words or wave the right magic wand. That's just absurd. This is why I believe this kind of reasoning is an attempt to actively refuse to learn anything from this fiasco.

I keep looking at this thread hoping that somewhere you'll actually give an example that's even vaguely comparable to what happened.  But, yet again, you disappoint.

Here's your example rewritten to at least have a crude similarity to the situation 0 but with your conlusions left intact.

"As a silly example, suppose I ask you to lend me some money.  You know that a lot of people are borrowing money and gambling on the slots so you ask whether I intend to gamble on the slots.  I say no.  You ask whether I'll lend the money to others who gamble on slots and I say no.  Say you also believe what I tell you and therefore loan me money, fully believing that I won't gamble it on the slots or lend it to other who will gamble it on the slots.  In this case, if I lend the money to someone who gambles on the slots and they lose the $50, it's not fair for me to be responsible to you for the entire $50, lost profits, and so on.  When you have a common mistake, made equally by both parties, with no significantly greater fault falling on either party, it is inequitable to try to enforce the contract as agreed. In our gambling case, our contract never addresses the case where I lose money because neither of us considered it possible -- it can't say what should happen in that case because neither of us ever tried to make it do so."

Do you see now just how dumb it is?

Elsewhere you've claimed PH was somehow "trying to do the impossible".  Your claims that it's impossible to make 1% a week without investing in Pirate is unproven - yet your entire argument relies on it (if it's not totally impossible then your argument fails immediately - as you'd have to accept an investor couldn't know whether PH was investing/lending to such an alternative).  Somewhere you've somehow conflated "investments in pirate were going to fail" with "all investments paying 1%+ per week were invested directly or indirectly in pirate" and have constructed an entirely fallacious chain of evidence based on that very elementary mistake.  And now you keep on constructing different analagoies- none of which are actually analagous.

Here's a few pointers for your next attempt at an alternative comparable scenario.  It needs to contain the following elements:

1.  There's a well-known risk.
2.  The Investor asks the Investment whether they have exposure to that risk.
3.  The Investment indicates they have NO exposure to that risk (they do't say "Yes" as in your above-quoted dismal failure of an attempt at an analogy).
4.  The Investor does not know the details of how the investment will be used - and has no way to find out (Again, totally unlike your above example).
5.  The Investment uses the raised funds to expose themselves to the risk.  They claim this was unintentional.

You would appear to maybe be claiming that my points 2-4 are irrelevant as investing in Pirate was the ONLY thing PH could be doing.  Are we meant to take your word for that?  If we find ONE company that paid 1% per week around then without pirate exposure would that disprove it?  Or do you have some (so far unreleased) information indicating that PH, specifically, was bound to be invested in Pirate - even if others could make 1%+ per week without pirate exposure?

I think the Kraken fund would likely be a slam dunk case for a scammer tag. Even if he is making good faith efforts to repay that debt, he *started* that fund after Pirate was already in default and he fully knew that there was a good possibility Pirate would never repay a single Bitcoin. Nevertheless, he clearly personally guaranteed that principal. Even if he still personally believed that Pirate would pay back all or some of the money he owed "soon", I'm not at all convinced his investors shared that belief. It was specifically his guarantee that induced that investment. The only blame you can place on the investors is for foolishly believing Patrick's personal guarantee. And, of course, "You shouldn't have believed me" is not even a partial defense even if "You made the same mistake I did" is.

It seems I disagree somewhat with what's happening here. I think it's entirely fair to give people a "scammer" tag even if they're making good faith efforts to repay a debt. And I think it's quite likely that Patrick deserves one simply because even if you split the losses with his investors and give him a few years to pay, he still hasn't acknowledged the validity of the debt, committed to some reasonable schedule of payments, or actually made reasonable payments. Even if he's broke through no fault of his own, if he can't pay for his share of the damage he did, IMO he deserves a scammer tag. (Not because he's a scammer, but because he incurred obligations he couldn't even come close to satisfying, even after giving him every imaginable consideration.)

No. That is a comment made by an user identified as Keyster. The author of that blog entry is Paul Elam.

This indicates that you do not even know how to examine data collected from the Internet.

You missed my original comment few lines bellow of Keyster comment.

Fail...

By the way, this is not a thread about my character. You can open your own thread about me, as CharlieContent did.

This part is completely false:


He's put absolutely zero effort, and he's made payment in what amounts to a mockery (a couple percent). It would be barely enough to buy him flowers.

Please do read the thread.

Also, I would like you to make a statement re AugustoCrappo's allegations above. Are you in some sort of confederation with him re this entire discussion?

Patrick rates this ruling AAA+, especially considering the ruling didn't take into account the new information in this thread showing that he actively deceived "investors" through his "newsletter". 

Theymos, a suggestion that has been made that I think does have merit is making a "In Default" tag for people in debt that can be evidenced?  What do you think?

+1

I haven't investigated this much. I didn't read most of this thread. Maybe I'm totally wrong about my facts, but my current understanding is:

PatrickHarnett probably did break some contracts, though he never intentionally broke them and in fact he tried to take some precautions to avoid breaking the contracts. Still, he has an obligation to pay back the victims of his broken contracts at least the money that his victims directly lost (ie. the loan principal). Maybe he has a moral obligation to continue following the exact terms of the contract, but that seems to be impossible, and I'm not going to enforce that using the scammer tag.

When someone breaks a contract and ends up having to slowly repay debt, sometimes they get a scammer tag first and the tag is removed once their debts are paid. But since PatrickHarnett seems to be putting a lot of effort into paying his debts, and since he's always acted pretty honestly, I tend to think that he should not get a scammer tag unless he stops making payments on his debt.

Is this you?

Yes, I donated as everyone else and the donation represents my merit. To pay for a certain status is also a matter of merit in case you do not know. The 50 BTC which I donated were obtained from my own effort.

You... Well... You paid 5 BTC for a person to design a truck with cherries and you did not obtained any merit with that.

 

So wait, have you obtained the oh so revered VIP thingie "on your own merit" or did you just donate like everyone else?

I am the person with good relationships with the forum participants since my registration. I am sure that no one had included my username in an ignore list. I became a forum VIP member by my own merit. I have a great deal of respect for Theymos because his background and his actions. We even share same preferences for books, games and other activities.

You are completely the contrary of my character. Your relationship with the forum participants have been bad since your inception. You never donated for the welfare of this forum. Your username is present in various ignore lists. You have no respect for Theymos neither you share any preferences with him.

I recommend you to do a mirror check. I am sure Mircea Popescu can obtain one for you.