What information did Patrick have that others didn't have that would have changed the conclusion they drew?
That's immaterial. What proof do you have the lender had exactly the same information as the borrower did?
The problem is that the contract doesn't cover the case where the loans have correlated risk.
Yes, it does. That's exactly why the negotiations start with "do you have correlated risk X". Had the scammer answered "yes" or even "maybe" the contract would never have happened. He did neither, he answered "no". Living up to that "no" is upon him.
Right, but the agreement was predicated on a mutual understanding that the loans didn't have significant correlated risk.
Nothing of the kind. The agreement was predicated on a mutual understanding that the lender lends and the borrower repays with interest.
The quote from "another thread" has the relevance of pointing out that we were both the first and for a long time the only to clearly state that Pirate is a scam. As such, proposing this theory whereby "nobody knew" that Pirate might have been a scam is ridiculous. The entire point of that agreement is squarely against this.