For what it's worth, I'm now personally convinced that BurtW was himself convinced that Pirate was not running a Ponzi scheme or similar scam. He's actually a good example of why I think most PPT operators deserve a "free pass" for the Pirate fiasco.
It is absurd to suggest that a reasonable person could accept that it was anything other than a scam. If a PPT operator didn't know, then they should have know and are negligent. This standard applies once you take an active role, as they did. Those who solicit money, fabricate credit ratings, promote or shill for the scam bear a greater share of culpability. A free pass would be a mockery of justice, if that matters at all.
Of course they did know and thanks to Joel, the cat in the bag, can even still panic-hoard their coins, cause they had the inside information, when needing to draw on pirate and when
new suckers still came in sufficiency to pay the interest of the fat cats. They can still blame pirate and some russian, which is intimately familiar with Sir Byron Micon ( if OP cares to explain, why he new a week before mybitcointrade changed hands about this fact) Madoff was caught, half of the loot was recovered, not from him but from his feeder funds!