Scammer tag: PatrickHarnett

[Zeeks]

Seems odd that there is even an argument. PatrickHarnett is supposed to have paid back some Bitcoins and has not. I am sure there are reasons for this but that still does mean he is in default. Paying back little bits of what he owes doesn't change that.

Or, do Bitcoins operate on a different set of logic?

[1714786341]

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[JoelKatz]

Here's a trivial example: Both parties to an agreement believe a truck contains 5,000 pounds of cherries and both believe that $2/pound is a fair price. They agree to sell the cherries for $10,000, based on their common correct belief that cherries are worth $2/pound and their common mistake belief that the truck contains 5,000 pounds of cherries. If it turns out the scale was broken and the cherries actually weigh 4,500 pounds, how much is "his debt"?

The argument would be that you can't look to the contract because the contract doesn't say what happens if the cherries weigh 4,500 pounds. Everything written in the contract is based on the assumption that the cherries weigh 5,000 pounds. (Unless it contains some clause about the weight, of course.) Here, it is clearly unjust to enforce the contract as agreed because the agreement was predicated on the shared belief.

Assuming you mean a buyer and a seller by "both parties," the number of cherries wouldn't make a bit of difference unless mentioned in the contract.  If the buyer didn't do his due diligence in verifying the number of cherries on the truck, and didn't add wording specific to the number of cherries he was receiving, that was his problem.

I think you're missing the point. The point is that in the minds of both parties, the agreement was an agreement about what to do with 5,000 pounds of cherries. If 5,000 pounds of cherries don't actually exist, there is no actual agreement.

Suppose the contract isn't written, but there was a mutual understanding that the truck contained 5,000 pounds of cherries. Does the buyer have to make the truck contain 5,000 pounds of cherries? Or does the seller have to settle for however many pounds of cherries are in the truck? You *can't* enforce the contract as agreed because the agreement is based on a false premise -- that the truck contains 5,000 pounds of cherries.

In the case with Patrick, the number of cherries WAS specified.  Well, the interest rate was, anyway.  And Patrick failed to hold up to that interest rate.  It'd be like the seller of the cherries writing in the contract that he was selling 5000 pounds of cherries, but he only brings 4500 pounds, using the excuse that someone must have stolen the other 500 pounds out of the back of the truck last night.  That doesn't make a bit of difference - the buyer bought 5000 pounds of cherries, not 4500, and unless a new contract can be established (likely with a reduction in price), the seller is in the wrong, not the buyer.

Why didn't the seller sell 5,000 pounds of cherries, not 4,500?

You stick to the word of the contract no matter what.  That is what is enforceable by law.  Assumptions DO NOT MATTER.

The problem is that in cases like this, it's impossible to do that. The words of the contract refer to things that don't actually exist. The "cherries" spoken of in my example contract don't actually exist. Whether the contract said "5,000 pounds of cherries" or not, if that's what "cherries" meant, then it's speaking about a non-existent thing. There's no way to enforce it as written. (Unless it had some kind of clause that addressed this case.)

This case is similar. The loans the agreement was premised on turned out not to exist in the form both parties believed they did.

By the way, I now have looked at the amounts outstanding and the repayments, and I think it's inevitable that Patrick will default by any equitable standard, if he hasn't already. Even with absurdly generous terms (like repaying 40% of premiums, with no past or future interest, over three years) I don't think Patrick and his wife will make the lifestyle sacrifices they would need to in order to pay back debts that are likely not enforceable in any court of law. If he's not presently willing to negotiate, and stick to, some kind of reasonable repayment terms and schedule, he deserves a scammer tag now.

[JoelKatz]

Seems odd that there is even an argument. Patrick Harnett is supposed to have paid back some Bitcoins and has not. I am sure there are reasons for this but that still does mean he is in default. Paying back little bits of what he owes doesn't change that.

Did you read the thread you are responding to? The agreement by which he was supposed to have paid back some Bitcoins is not enforceable as agreed due to common mistake.

Or, do Bitcoins operate on a different set of logic?

Of course they do. Otherwise the agreement would be void because of the usurious interest rate.

[Zeeks]

Seems odd that there is even an argument. Patrick Harnett is supposed to have paid back some Bitcoins and has not. I am sure there are reasons for this but that still does mean he is in default. Paying back little bits of what he owes doesn't change that.

Did you read the thread you are responding to? The agreement by which he was supposed to have paid back some Bitcoins is not enforceable as agreed due to common mistake.

Or, do Bitcoins operate on a different set of logic?

Of course they do. Otherwise the agreement would be void because of the usurious interest rate.

Why does a "common mistake" matter? Anyone lending/giving/investing Bitcoin probably believes that the other side can live up to their end of the agreement but when they don't it's the fault of the person receiving the Bitcoin who is then unable to pay back what they owe.

[MPOE-PR]

In the case with Patrick, the number of cherries WAS specified.  Well, the interest rate was, anyway.  And Patrick failed to hold up to that interest rate.

That's certainly a breach, but not even the biggest one. The main problem here is that Patrick failed to repay the principal on the commonly agreed due date, not that he failed to repay interest as agreed.

So to use your cherries example: someone agreed to sell one truck with 5k lbs of cherries to be delivered at a specified location at a specified time, and someone agreed to buy same. The buyer paid the seller on the spot. At time of delivery, seller informs buyer that a) there's only 4500 lbs of cherries in the truck and b) the truck is "somewhere in Argentina" but will be making it towards the specified location "as best it can".

Well duh.

[SgtSpike]

Joel, your arguments are absurd.  If a seller agrees to sell 5000 pounds of cherries, but only delivers 4500 pounds, that is on him.  He either needs to make things right by delivering an additional 500 pounds, or renegotiate the contract (i.e., agree with the buyer to only sell 4500 pounds at a lower total price).

The contract in question with Patrick wasn't an agreement about "what to do with X number of bitcoins", it was an agreement whereby the buyer would give Patrick a particular number of bitcoins, and Patrick would "deliver" 1% per week back to the buyer, plus the principle at a certain date.  Just like an agreement where a seller agrees to deliver a particular number of pounds of cherries to the buyer.  It wasn't contingent upon whether Patrick's investments panned out or not.  If it did, the contract would have stated as much.  NOWHERE does Patrick and the other party agree that, if Patrick's investments default, then Patrick can default without giving his investors recourse.

Anyway, I'm done debating about this - we're just rehashing the same thing over and over.  I'll just say that your arguments are fairly silly, and would not hold up in any court of law.

[superfastkyle]

Joel's arguments are really dumb. Patrick was acting as a bank. Charging higher interests for loans vs paying deposits, with the assumptions that the difference would more than make up for defaults in the loans with a little profit left for him. The fact that Patrick loaned out money to people who were investing in pirate is not anyone else's fault but Patrick's, he should have either been more careful with who he was loaning to or charged a higher interest rate. You don't expect your bank to pay you half of your usual percentage rate on a CD or savings account because more people foreclosed on their homes than the bank suspected?

Joel, your arguments are absurd.  If a seller agrees to sell 5000 pounds of cherries, but only delivers 4500 pounds, that is on him.  He either needs to make things right by delivering an additional 500 pounds, or renegotiate the contract (i.e., agree with the buyer to only sell 4500 pounds at a lower total price).

The contract in question with Patrick wasn't an agreement about "what to do with X number of bitcoins", it was an agreement whereby the buyer would give Patrick a particular number of bitcoins, and Patrick would "deliver" 1% per week back to the buyer, plus the principle at a certain date.  Just like an agreement where a seller agrees to deliver a particular number of pounds of cherries to the buyer.  It wasn't contingent upon whether Patrick's investments panned out or not.  If it did, the contract would have stated as much.  NOWHERE does Patrick and the other party agree that, if Patrick's investments default, then Patrick can default without giving his investors recourse.

Anyway, I'm done debating about this - we're just rehashing the same thing over and over.  I'll just say that your arguments are fairly silly, and would not hold up in any court of law.

[JoelKatz]

Why does a "common mistake" matter? Anyone lending/giving/investing Bitcoin probably believes that the other side can live up to their end of the agreement but when they don't it's the fault of the person receiving the Bitcoin who is then unable to pay back what they owe.

Because when there's a common mistake, the contract is about something that doesn't actually exist. For example, if both the buyer and seller believe there's 5,000 pounds of cherries in a truck and agree to sell the 5,000 pounds of cherries in the truck for $10,000, the contract is void. There's no way to enforce it because its subject doesn't actually exist.

The issue is not that one side can't live up to the agreement. This issue is that the agreement was about a loan portfolio that both sides believed had particular attributes it didn't actually have. The agreement was about something that both sides believed to exist but that did not actually exist.

Patrick was acting as a bank. Charging higher interests for loans vs paying deposits, with the assumptions that the difference would more than make up for defaults in the loans with a little profit left for him.

That's correct. However, don't forget that this assumption was shared by those who loaned money to him. Read the transcript.

So the agreement still would have happened even if Patrick said "Yes, I have significant Pirate exposure"? Bullshit.

Fuck you. The agreement would NOT have happened if the scammer admitted at that time what we now know to be reality. The fact that you do not know this speaks about your ignorance, that's all.

Somehow, I think we're talking past each other. Please re-read what I wrote. If you don't understand it, perhaps I can find a way to make it clearer. Your response reflects a complete misunderstanding of the clear meaning of my words. My whole point is that both sides believed there was no significant Pirate exposure in the loans, and had either side believed otherwise, the agreement would not have happened. I think you agree with me on this, right?

Honestly, I'm somewhat disgusted at the righteous indignation of the usurious lenders who refuse to accept any responsibility for their significant role in this fiasco.

So you're against lending, btc business, money, whatever. Your problems, I don't care and they don't amount to arguments against contracts. Seek help.

Nope, I'm just against idiocy. Lending at usurious interest rates using contracts that can't be enforced in a court of law with people who have no ability to repay the loan other than from the expected profits of an implausible business is idiocy. Without that idiocy, none of these fiascos would have happened.

[Zeeks]

If I were to take Bitcoins from someone and told them I was going to put those Bitcoins in my special MoneyMultiplier™ and they agree that is fine and lend me the money then it turns out I have no such thing and don't have their money anymore because my MoneyMultiplier™ ate it and never multiplied money in the first place, it's a common mistake because they believed me when I said I had a working MoneyMultiplier™ therefore the contact is null and I'm not considered in default when I can't repay them like I agreed?

[superfastkyle]

I did, so your saying that you shouldn't expect to be able to withdrawal your money from a bank anytime you want? You can easily look up the most popular us banks and see that they loan out your money 10 to 20 times their deposits, so they are just as risky if not more than Patrick. But you don't question being able to make a withdrawal from your checking account. By your ideas there wouldn't be any secured deposits with bitcoin as bitcoin won't ever have a "federal reserve". All investments have risks that's why banks make a profit is to calculate risks and remove them from the customer. Patrick basically said it was a secured loan, when he said he had money to cover it if pirate would fail.

Patrick was acting as a bank. Charging higher interests for loans vs paying deposits, with the assumptions that the difference would more than make up for defaults in the loans with a little profit left for him.

That's correct. However, don't forget that this assumption was shared by those who loaned money to him. Read the transcript.

[superfastkyle]

The blame the victim mentality here is getting ridiculous. We don't blame women when they are raped so why do we blame people for getting thieved. Everyone takes risks in life they regret and misjudges others' characters, I'm sure even Joel has done it. It doesn't make them an immoral person

[JoelKatz]

The blame the victim mentality here is getting ridiculous. We don't blame women when they are raped so why do we blame people for getting thieved. Everyone takes risks in life they regret and misjudges others' characters, I'm sure even Joel has done it. It doesn't make them an immoral person

There's nothing wrong with blaming the victim when the victim is in fact at fault. The error in blaming the victim is when you attempt to use blame for the victim to excuse or reduce the culpability of the perpetrator.

If you walk through the worst neighborhood on a dark night with $100 bills sticking out of your pockets and get robbed, you're an idiot who deserves some blame for the robbery. However, the robber certainly can't use this to reduce his culpability. There's no "he was asking for it" defense to robbery.

I did, so your saying that you shouldn't expect to be able to withdrawal your money from a bank anytime you want?

Nope. I never said that.

You can easily look up the most popular us banks and see that they loan out your money 10 to 20 times their deposits, so they are just as risky if not more than Patrick. But you don't question being able to make a withdrawal from your checking account.

Well, I don't because my checking account is insured by the government. If it wasn't, banks would likely make provisions to cover runs in their deposit agreements.

By your ideas there wouldn't be any secured deposits with bitcoin as bitcoin won't ever have a "federal reserve".

No, there are other ways to secure deposits. It's kind of complicated to discuss in the thread, but so long as there's sufficient equity, you can protect against a liquidity crunch. It's hard to protect against an equity crunch though -- if a large number of loans go bad, then lenders will lose money. So far as I know, there's no fix for this other than specifically buying insurance. Even then though, of course, if things get bad enough, the insurer can go broke, as happened during the recent global economic collapse. If don't know how to fix that.

All investments have risks that's why banks make a profit is to calculate risks and remove them from the customer. Patrick basically said it was a secured loan, when he said he had money to cover it if pirate would fail.

That's correct. That was Patrick's mistake. And I agree that gives him partial culpability for the loans going bad. However, those who loaned Patrick money also believed that his loans had little Pirate exposure and not because Patrick said so, but because Patrick explained his business model.

[MPOE-PR]

The blame the victim mentality here is getting ridiculous. We don't blame women when they are raped so why do we blame people for getting thieved. Everyone takes risks in life they regret and misjudges others' characters, I'm sure even Joel has done it. It doesn't make them an immoral person

There's nothing wrong with blaming the victim when the victim is in fact at fault. The error in blaming the victim is when you attempt to use blame for the victim to excuse or reduce the culpability of the perpetrator.

If you walk through the worst neighborhood on a dark night with $100 bills sticking out of your pockets and get robbed, you're an idiot who deserves some blame for the robbery. However, the robber certainly can't use this to reduce his culpability. There's no "he was asking for it" defense to robbery.

Then what exactly are you doing here in the robber punishment thread?

[JoelKatz]

Then what exactly are you doing here in the robber punishment thread?

Explaining that the failure that resulted in the loans going bad was due to a mistake made jointly by both parties and thus not equitably allocatable entirely to one of them. Patrick is as much a victim here as those who loaned him money -- assuming he eventually makes some kind of reasonable settlement for a portion of the principle.

[superfastkyle]

Well I think he just admitted that patrick should not have his liability decreased just as a robber would not, so he deserves the scammer tag. Now that that's settled, I'm wondering why Joel cares about bitcoin at all. The only way to have a totally secured loan is with a central bank, you could secure it with a car, home, precious metals, but all could collapse in price. So I guess bitcoin is doomed to fail.

[Dalkore]

Am I the only one who after reading the transcript, does not understand what is wrong other than the allegation that a deposit has not been paid back in a timely manner.     Could the OP please summarize what is actually the issue so we can weigh the evidence.  Just posting some logs out of context and having someone passionately arguing with the OP using Pirate references is not enough. 

I want your argument so I can weigh it.



Appreciated,
Dalkore

Deposit was made, as per an agreement. Deposit was not returned, as per the agreement.

That doesn't mean that a "scammer" tag is what is needed.  It sounds like we have another label and needs to be invented for things of these nature ("In Default" tag, etc...).   There was risk involved when you put deposited your money.  He is making a solid effort to pay people back and keep is creditors apprised of the current situation.  Scamming in my book is a very specific thing that has facts surrounding it that show the person's true intent. 

Intent is the most important aspect of giving this tag out.  We need to make the distinction on someone one intends to do something and someone who doesn't.   If you think otherwise, I would like to see reasoning what else is more important.  Don't mentioned, be broke his word, that isn't scamming per say, externalities do happen and when it did happen in this case, he didn't disappear like a scammer, he is putting real effort forward to make good. 

[Dalkore]

looks like Hartnett took the loan, and thus the obligation to repay.  further, he misrepresented his exposure to his creditors.

mistake is his.  scammer/default.

Another use of the word "default".

I propose a "Default Tag" be used for this type of situation until the principle is paid.  The defaulter could apply for removal and we could have a 1 week comment period where if people who are actually owed principle and dispute the request with hard evidence only.  If all disputes are settled or none of the known creditors come forward, then the tag is lifted.

[makomk]

The argument would be that you can't look to the contract because the contract doesn't say what happens if the cherries weigh 4,500 pounds. Everything written in the contract is based on the assumption that the cherries weigh 5,000 pounds. (Unless it contains some clause about the weight, of course.) Here, it is clearly unjust to enforce the contract as agreed because the agreement was predicated on the shared belief.

That's a bad analogy. Patrick Harnett had full control over who he lent to in order to reduce correlated risk. He had information on what exactly applicants claimed to be using the money for and the ability to demand as much evidence of this as necessary. Based on this evidence, he falsely assumed that his borrowers weren't exposed to Pirate and got screwed - that's the incorrect belief that's the problem here, and the people who loaned Patrick money didn't have this information! They had to rely on Patrick's promise that he was competent to vet applicants and that he'd made sure not to lend money to people who'd just invest it in Pirate.

A closer analogy would be if one party entered into a contract in which they gave another party money which the second party was to buy a lorry-load of cherries with, and they'd split the profit from reselling them. If the second party then goes and buys off the back of a truck in some parking lot and gets crates full of rubble instead, which party should be liable?

[orcinus]

Explaining that the failure that resulted in the loans going bad was due to a mistake made jointly by both parties and thus not equitably allocatable entirely to one of them. Patrick is as much a victim here as those who loaned him money -- assuming he eventually makes some kind of reasonable settlement for a portion of the principle.

You are making no sense. Are you living in the vicinity of a strong reality distortion field of some kind?

1) you ask me for money,
2) i ask you if you're a reputable, honest member of the society, with a steady income,
3) you say yes,
4) i lend you the money, we sign a contract agreeing on the interest rate and date of return,
5) you gamble 1/3rd of it, waste 1/3rd on hookers and snort the last 1/3rd
6) you fail to return the principal
7) you fail to pay the interest

In the JoelKatz world, that means we're both equally guilty. And it's a "common mistake", whatever that means.
Here's how the above sequence of events looks like in the real, grownup world:

4) i lend you the money, we sign a contract agreeing on the interest rate and date of return,
6) you fail to return the principal
7) you fail to pay the interest

THERE IS NO SUCH THING as a "common mistake" in contracts. Contracts are an if-then thing. IF i give you X, THEN you return X+Y. IF you fail to return X+Y, THEN you default. That's all there is to it.

[JoelKatz]

That's a bad analogy. Patrick Harnett had full control over who he lent to in order to reduce correlated risk. He had information on what exactly applicants claimed to be using the money for and the ability to demand as much evidence of this as necessary. Based on this evidence, he falsely assumed that his borrowers weren't exposed to Pirate and got screwed - that's the incorrect belief that's the problem here, and the people who loaned Patrick money didn't have this information! They had to rely on Patrick's promise that he was competent to vet applicants and that he'd made sure not to lend money to people who'd just invest it in Pirate.

First, your last sentence is factually untrue. They did not have to rely on Patrick's promise. They could have asked for any evidence they wanted. Second, it wasn't a "promise". It was Patrick's statement of his belief. Lastly, this smacks of the same "due diligence" argument rightly ridiculed regularly in this forum. You can't fault someone for not doing the impossible.

A closer analogy would be if one party entered into a contract in which they gave another party money which the second party was to buy a lorry-load of cherries with, and they'd split the profit from reselling them. If the second party then goes and buys off the back of a truck in some parking lot and gets crates full of rubble instead, which party should be liable?

Exactly. In this case, the loans that formed the basis of the contract turned out not to be what both sides thought they were through a failure shared equally by both sides.