It can be very hard to tell the difference. It depends how much of the payback deficit is caused by genuine investment and operating losses. His investors had substantially the same information he did, so it's not unreasonable for them to bear the losses. That is, after all, the purpose of investors. (And I think we all understand that the line between a loan and an investment is thoroughly blurred at interest rates this high. It was clear he was loaning the funds out and clear that there's always a risk of bad loans.)