So what evidence did MP have to draw that conclusion when PH asserted the opposite?
The business model, the interest rate, and the existence of Pirate. That was all that was necessary.
What information was there about PH which meant any reasonable person would have concluded he was lieing or mistaken? I was under the impression he had a fairly good reputation - what am I missing? Didn't he do credit-ratings - suggesting he went far beyond normal due-diligence?
The business model was fundamentally broken. The only people who will borrow money at such absurdly high rates are those that are taking, or are, absurdly high risks. The existence of Pirate and the greater interest rate he was paying is sufficient information to conclude that people would borrow from Patrick to loan to Pirate and lie about it. The lack of enforceability in any court of law is sufficient to conclude that if the things people did with the loans went bad, they wouldn't be willing to take their own money to cover the losses. (As Patrick appears to be unwilling to do.)
Looking back after the facts and concluding "well it should have been obvious..." isn't much evidence of anything. Is it really your assertion that ANY investment paying 1% per week (or whatever he was offering) back then MUST have been invested in pirate? Was there NO alternative? Was PH's reputation SO bad that he deserved NO credit for doing due diligence?
Yes. It's has nothing to do with PH's reputation. It has nothing to do with what he did or didn't do. It has to do with the simple fact that he was saying "X follows from A, B, and C" when it simply did not follow.
If you're going to assert that something was common knowledge (in this case that it was common knowledge that PH was invested directly or indirectly in pirate) then:
1. You should prove it.
Search the forums. You'll see lots of people saying this. It is obvious. It was obvious.
2. How come PH didn't know? If he didn't know how can you reasonably assume MP must have? Or are you saying he DID know?
I am saying that he, like all the people who loaned money to him or Pirate, had objectively unreasonable beliefs. They were deluded.
[You see, point 2 is the key one. PH had MORE information than MP (deposit details). If PH couldn't draw that conclusion it logically can't make sense to assert that someone in MP's position MUST have known it. The alternate, that PH DID know (and MP should have) would be an automatic scammer tag - as then PH would have misrepresented himself when making the contract. You can't have it both ways - that PH didn't know but MP must have known. So which is it?
They both should have known. Neither knew.
They both drew the same incorrect conclusion. So did everyone who loaned money to Pirate. This was a case of common mistake from equal fault.
Why are you so resistant to holding people accountable for mistakes that cause harm?