If people invested money with Patrick, then unless he can return 100% of the principal as well as any interest promised while his business was operational, then he should be labeled either a scammer or incompetent.
I agree. Post Kraken, a scammer. Pre Kraken, incompetent.
As I said before, it's this simple:
1) There's no way to enforce these loans in any court of law. That means if people have any reason not to repay, they won't repay. Many people won't sacrifice their real-world lifestyle and bank accounts to repay a bitcoin loan that can't be enforced anyway. Walking away is just too easy.
2) Borrowing from Patrick to invest in Pirate seemed like too good a deal, especially since people knew they could just default on Patrick without consequences. No method would prevent this, short of actually tracking what each person did with the bitcoins, which nobody would agree to and everyone knew Patrick wasn't going to do.
Not realizing this makes Patrick incompetent. However, it is important to remember that this should have been equally obvious to those who loaned Patrick money. So they too are incompetent, and their incompetence harmed Patrick just as Patrick's incompetence harmed them.