Quote from: JoelKatz on November 13, 2012, 09:44:03 AM

Quote from: Stephen Gornick on November 13, 2012, 09:07:47 AM

If someone says they have funds to personally cover any losses and then doesn't actually cover said losses there's not much left to argue about here.

I agree. Patrick was mistaken and should be held accountable for that mistake:

Aug 10 08:07:58 you deem yourself able to repay your depositors in the event bs&t goes bankrupt, and nothing is recovered ?
Aug 10 08:10:17 in the event BS&T goes bust, I have more than enough assets to cover that
Aug 10 08:10:41 mainly because the 15,500 coins I hold on deposit are not invest in BS&T

There's no evidence this was a lie or misrepresentation. It was simply something that he was incorrect about. Where I disagree with some others in this thread is that I believe the people who loaned Patrick money made precisely the same mistake and are likewise accountable for the harm that mistake caused. Patrick believed he was sufficiently free of Pirate exposure and correlated risk that he would have sufficient loan assets to make repayments if Pirate defaulted. He was wrong. But this was not because of secret knowledge only he had, it was because he thought his basic business model (which was not a secret) was sound when it wasn't.

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This logic of yours is NOT what the community needs to hear.

If people are not held accountable for bad decisions and poor judgment that causes harm, we're doomed to repeat Pirate, Patrick, and Hashking over and over again. Those who invested paid folks like Pirate to run their scams and knew, or should have known, that they were paying people to make them the recipients of fraudulent transfers. Patrick was an un-knowing Pirate intermediary and is, in my opinion, much less culpable than the knowing Pirate intermediaries such as PPT operators. Those who loaned him money were equally un-knowing Pirate intermediaries.

Patrick Harnett's offered loans and taking deposits. He was acting somewhat as a bank often guaranteeing no loss. If he was under a LLC/entity separate from himself, the operation defaulting and paying partial might have the way to go. However, this was not the case. He operated under his own name.

- Not a joint venture.
- Often promising no default would cause any loss.
- Claims of good backings.
- Offering deposits with interest paid on balance.

When someone deposits at a bank, they don't accept to take any risk as to if the bank will or will not make good investments. If the bank cannot pay depositors, it has to default. Same as when the bank loans to businesses. They're not in a joint venture and the bank is not going to accept the business defaulting on the loan without the whole business defaulting on the sole reason the specific investment didn't go as planned and claimed. The person extending money to the other party is not at fault for the receiver's business shortcomings.

You could potentially blame the depositors for for their choice of place to deposit their money I suppose. And you could argue that the default being unavoidable, it's logical that people are partially paid with what is left.

However, in this case, the issue is not the default or partial payment. It's that Patrick Harnett chose to operate as himself, and he took deposits in his name and should not default on deposits if he does not default himself as an individual and keeping his personal wealth. The risks of operating under your own name instead of managing a legally separate entity.