(continuing from the previous thread)
The way I understood it, what they were offering was insurance against an unknown, clearly disclosing that there was a risk of default that was ostensibly unknowable, and in the process of providing this quasi insurance with their own funds, were simply enjoying the opportunity to make a bet themselves (in the opposite direction against their customers) in a manner that magnified their potential losses/returns relative to the amount they risked, essentially equivalent to betting with leverage. Must the pass-through operators be aware that the scheme was an actual fraud in order for them to be liable? I am mostly just curious.
I don't believe that's quite an accurate assessment. AFAIK, for most of the PPTs, either there was no insurance and the risk and bearers of that risk were explicitly stated publicly in their terms, or else for the insured PPTs (at least those that made good on that insurance, and there were some), would not have been betting against their clients, since they would need to reserve money aside in unrelated assets in order to pay out. In short, just like any other insurance company, they were betting that they would NOT have to pay out (the only situation in which they would have made any extra money), ie that pirate would not default.
Also, many/most of the PPTs are not US based, which makes them much more difficult targets.
I do have a question, though. Assuming we do manage to force pirate and associates to cough up, either by returning what was stolen and/or by liquidating their property, is there a reasonable process that we could arrange a legal agreement for how those funds will be distributed
before we get a ruling? I could only imagine a series of disasters following without such an agreement.