Well, looking at what happened it obviously wasn't (whatever his steps were to ensure his deposits were pirate-free, those steps were clearly woefully inadequate). But what we NOW know isn't particularly relevant to the discussion in this thread.

At the time I had no idea whether it was viable or not.  As stated earlier, I avoid investing in anything where the business is undefined.  With this sort of lending business, the recipients' businesses are unknown to me - hence I can't assess the risk so won't touch the investment.  That's a decision I've made because there's little/no ability and/or willingness for lenders to take action against defaulters - so unless I can be confident there's likely to be no reason for default I won't invest.

The issues isn't whether his business model was sound anyway - it's whether it was KNOWN to be unsound.  We already know that wasn't accepted by all - you've already accepted neither PH or MP knew it (or even believed it) and have yet to demonstrate that any significant number of people believed it.