Scammer tag: PatrickHarnett

[MPOE-PR]

So we're up to what, Joel the Shill repeating his baseless, completely destroyed, false claim for the 48th is it time? And a couple more people added to the list?

Theymos&co, stop fronting for scammers. It washed (somehow) in the GLBSE case. It won't wash forever.

[jasinlee]

So we're up to what, Joel the Shill repeating his baseless, completely destroyed, false claim for the 48th is it time? And a couple more people added to the list?

Theymos&co, stop fronting for scammers. It washed (somehow) in the GLBSE case. It won't wash forever.

Was this thread about PH ? Or just bait to bash other people?

[greyhawk]

So we're up to what, Joel the Shill repeating his baseless, completely destroyed, false claim for the 48th is it time? And a couple more people added to the list?

Theymos&co, stop fronting for scammers. It washed (somehow) in the GLBSE case. It won't wash forever.

Was this thread about PH ? Or just bait to bash other people?

Well, these other people just keep on running right in front of the swinging bat.

Now, the question is, who's at fault here: The guy swinging the bat or the guys running into the bat's arc yelling "Hey, maybe you shou*OOOMF*?"

[ab8989]

The mistake was failing to realize two things:
1) There's no way to enforce these loans in any court of law ...
2) Borrowing from Patrick to invest in Pirate just seemed like too good a deal ...
This is why Patrick's business failed. And there is no argument you can make why Patrick should have known this that doesn't equally apply to those who loaned him money.

I am not exactly sure are you here claiming the Patrick understood this in his heart or did not. In other parts you are clearly claiming that at least some people understood these problems and publicly discussed them on this forum and you link their understanding very strongly to Patricks understanding of the situation. Either Patrick did infact understand these fundamental problems or at least should have understood them as they were presented to him. In neither of these cases it is acceptable to publicly post claims to the contrary in the attempt to get money flowing in, probably from the more stupid part of the audience and if somebody does that he deserves a scammer tag.

Some other kind of argument about the case was that Patrick was operating an honest to good solid business with all the best intentions and did not have any clue there might be big problems and everything just came as a total surprise from blue sky to him later. I might understand how somebody could argue about this not deserving a scammer tag, but in this case also the lenders were totally without fault to themselves and the reason the loss should be shared is that everybody was without fault of any kind. However this does not seem like the argument any more in the last reply.

I find the lenders stupid and think they are also at fault to the losses but I don't buy the theory that it is okay to separate money from the fools. This lenders stupidity and fault is totally separate issue from scammer tag to Patrick. In similar way I find the people falling to Nigerian scammers stupid and at fault of losing their money, but the Nigerians are still scammers.

About the people that borrowed money from Patrick, I know nothing of their actual status, so I am not making any claims about them. I am not even sure whether they exist in how big numbers or what is the actual route how money disappeared to pirate or where. Everything is possible in here. I think the probability is great that there are also good candidates for scammer tag in there. The pirate case was a gift from sky to many scammers and I would be very suprised if all losses that are said to be be because of pirate, are actually losses to pirate.

[BadBear]

I am not arguing that the terms of the contract specified a share of the losses. I'm arguing that the losses occurred because of a mistake and the harm from that mistake should be born by those who made the mistake and caused the harm.

How did the people who deposited with him cause harm? Yes mistakes were made all around, but Patrick's mistake was the only one that resulted in a loss of other people's money, which he promised to repay on demand.

[gabbynot]

https://bitcointalk.org/index.php?topic=124152.0  I started a scam accusation concerning Kraken fund. If anything is a slam dunk case of fraud that would be it.

+1.  That one is a pretty clear-cut case of fraud/scamming, more so than this current thread.

[JoelKatz]

I am not arguing that the terms of the contract specified a share of the losses. I'm arguing that the losses occurred because of a mistake and the harm from that mistake should be born by those who made the mistake and caused the harm.

How did the people who deposited with him cause harm? Yes mistakes were made all around, but Patrick's mistake was the only one that resulted in a loss of other people's money, which he promised to repay on demand.

If we assume that Patrick is obligated to repay them from his own funds, then Patrick was harmed -- with that assumption, the investment resulted in a loss of Patrick's money. Patrick is a person other than those who loaned him money. You can't use an argument like a bus and get off at your stop -- you have to see if it ends with consistent results and, if not, keep going.

If you start out trying to enforce the contract as agreed and think that means that Patrick is 100% responsible, then Patrick next has a claim against his investors for the harm their mistake caused him. This claim would offset their claim against him for making the same mistake. You end with them needing to split the losses.

However, I think seeing it as common mistake is more sensible because I don't think it's possible to enforce the contract as agreed at all since the agreement was about a loan portfolio that didn't exist in the form the agreement presumed. But you get the same result either way. It depends on how you try to construe the terms of a vague agreement.

[greyhawk]

If you start out trying to enforce the contract as agreed and think that means that Patrick is 100% responsible, then Patrick next has a claim against his investors for the harm their mistake caused him. This claim would offset their claim against him for making the same mistake. You end with them needing to split the losses.

Wait, so if someone breaks into my house and is accidentally impaled by the set of spears that I by mistake only very loosely fastened to my ceiling with a string that too goes across my floor, then that guy has a claim against me?

[JoelKatz]

If you start out trying to enforce the contract as agreed and think that means that Patrick is 100% responsible, then Patrick next has a claim against his investors for the harm their mistake caused him. This claim would offset their claim against him for making the same mistake. You end with them needing to split the losses.

Wait, so if someone breaks into my house and is accidentally impaled by the set of spears that I by mistake only very loosely fastened to my ceiling with a string that too goes across my floor, then that guy has a claim against me?

Unfortunately, yes. You can find dozens of lawsuits where someone is injured while trespassing with intent to steal and successfully sues the property owner. The most famous, Bodine v. Enterprise High School, involves someone trying to break into a school who fell through a skylight and successfully sued the school. (Successful in the sense that the school ultimately settled for a six-figure amount.) There was a great case in California where a man accidentally ran over the hand of someone trying to steal his hubcap. There was a successful recovery (around $75,000 or so) in that case.

There are two big differences between those cases and this case. In those cases, there isn't the same mistake made by both parties. And those are tort cases, not contract cases.

A reasonable justice system would, I think, prevent criminals from recovering from their intended victims except in very exceptional circumstances. See http://en.wikipedia.org/wiki/Trespasser#Duties_to_trespassers (If there was evidence that Patrick was dishonest in his communications with his investors, this common mistake argument would evaporate. It is predicated on roughly equal fault on both sides.)

[rjbtc]

So is this the same as me going to a bank, giving them $500 to open a savings account which will accrue interest and will also allow me to withdraw some or all of my $500 whenever I want, then at some point the bank says "yeah that $500, you can't withdraw that whenever like we said, but you'll still get interest on it"?

[JoelKatz]

So is this the same as me going to a bank, giving them $500 to open a savings account which will accrue interest and will also allow me to withdraw some or all of my $500 whenever I want, then at some point the bank says "yeah that $500, you can't withdraw that whenever like we said, but you'll still get interest on it"?

No because that doesn't have a common mistake and your bank deposit is insured. Also, you have a reasonable expectation that your bank will make only sound loans and no reason to think your bank's business model isn't sound. So it's totally different. (It would be different if, for example, you knew the bank was going to take all the money it borrowed to Vegas.)

However, prior to deposit insurance, it was actually pretty common for banks to reserve the right to delay withdrawals in the event of a run. Usually they specified a greater than normal interest rate in this case and so long as the bank was still fundamentally sound, this didn't usually cause any harm to their customers. If you wanted to withdraw $100, you would go to the bank and obtain a $100 withdrawal coupon which you could then sell for $100. Since the bank was still fundamentally sound, they could issue you a coupon worth more than $100 easily (against future loan returns). This tends to bankrupt the bank (because the coupons pay a higher interest rate than their loans and everyone runs to get the valuable coupons), but it doesn't significantly harm the customers.

Essentially, a bank has to ensure that they enough of a reserve to cover any liquidity crisis they might experience. So long as their loan portfolio remains basically sound, this isn't difficult. Of course, this fails utterly if the loans suffer massive default. This is what caused many banks to collapse after the mortgage meltdown, forcing the government to cover the losses through the FDIC. This is what it seems happened to Patrick.

[rjbtc]

This reminds me of that scene in Good Will Hunting where he's in court trying to argue some technicality to get off.

[BCB]

or Rain Main

[Namworld]

This is critical difference. They did not make the same mistake and especially not in the same way. Patrick should have been in a position to much better understand what is happening in his business.

In an ideal world, maybe that should have been the case. But in this world, it simply wasn't.

It makes no sense to say the lenders should have understood Patricks business enough and in same detail avaliable to Patrick to be able to make the judgement.

Perhaps it makes no sense, but it was in fact true. Patrick's business model and methods weren't a secret. They in fact *did* understand Patrick's business model well enough to make the judgment. If you look, you'll find some of Patrick's lenders arguing about this very issue in this very forum.

Patrick on the other hand should have understood these issues and in the case he does not he should not have made claims about them or pay if they are false. It is much more sensible to say that some lenders should be able to take what they are being told at face value and rely on that.

If so, why can't Patrick take what his borrowers told him at face value and rely on that? Patrick made precisely the same mistake those who loaned him money did. You're excusing his lenders but not excusing him.

Each of the lenders have their own set of assumptions. I would not even claim that two different lenders did the very same mistake the very same way.

I'm not sure I know what you mean by "assumptions". But the mistake was fundamental and inherent in the business model and lending environment. The mistake was failing to realize two things:

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.

2) Borrowing from Patrick to invest in Pirate just 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.

This is why Patrick's business failed. And there is no argument you can make why Patrick should have known this that doesn't equally apply to those who loaned him money.

(And, again, this doesn't apply to Kraken, which I think was likely an outright scam.)

That's about the only thing you can blame the depositors on: blindly sending their money to anyone without researching. If you're looking at convincing people to no longer do that, don't try to twist things to make it the depositor's fault.

Believing the seller to deliver on his claims is not the same mistake as making a mistake which cause the actual loss.

Otherwise, if a loaner would tell you that he would like a loan and that he can claims he can repay it with his mining rig because it produces enough for that, and the lender agrees the proposition/proof is enough for him, if the difficulty ramps up making the loaner impossible to repay the loan by meaning, the loaner is not freed of a part of the loan value on behalf it was a common mistake. The loaner is still in debt. There is no common mistake in accepting claims by the other party which ends up being false because the buyer cannot verify that and can expect the seller to deliver upon his claims. Neither is this acceptance of the claims the direct cause of the damage.

A common mistake would be if the buyer was for example in Washington (D.C.) and the seller was in Washington (state) and was equipped to deliver in Washington (state) only. On call, both assumed they were in the same Washington when making their contract which ends up being impossible to be delivered before the cherries spoil. Since the buyer also caused the loss through his mistake because both parties did not correctly specify their exact delivery location / delivery zone, he could be judged at fault too and expected to share the loss's cost because the supplier acquired the cherries and they're spoiling. Yet seller could be considered just as much at fault for claiming he was delivering in Washington but not specifying if it was the state or the city. The common mistake of not specifying the exact location directly rendered the contract impossible to execute and caused the loss.

If the seller claims to have something he can deliver an he could execute the delivery if he's right, it does not constitute common mistake. The contract is solely impossible because the sellers fact were wrong and the buyer expected them to be right. It is akin to the seller claiming he delivers in Washington D.C. when he never could. Or someone claiming he could repair something when he does not have the knowledge to. Someone claims he'll deliver X and delivers Y. Patrick claimed to not be exposed when he was. The fact the buyer assumes the seller's statement to be right does not cause the loss or invalidates the contract because the seller could execute it but did not actually have what he claimed, then the seller is fully at tort for not delivering. If someone claims to deliver something in a contract, he's the only one to blame if he did not have the means to or it does not end up being possible. Still, pirate exposure is not even included in the contract to start with which further invalidates that as a potential common mistake. (See further below.)

Common mistake applies when the mistake cause the loss. Not when the mistake is that both believe their would be delivery without a loss while the seller and deliverer was in charge of delivery and the means to do so, and ended up failing to his promises.

The buyer's error is that the seller claims would be contractually executed. Otherwise someone telling you he'll repay you and you accepting that to loan him funds would place you at common mistake if the loaner cannot repay you (not because he willingly conned you but because he ended up not being able to collect enough money to repay you. Both of you believing that he could.) Is he freed from debt?

-----------------------

So is this the same as me going to a bank, giving them $500 to open a savings account which will accrue interest and will also allow me to withdraw some or all of my $500 whenever I want, then at some point the bank says "yeah that $500, you can't withdraw that whenever like we said, but you'll still get interest on it"?

No because that doesn't have a common mistake and your bank deposit is insured. Also, you have a reasonable expectation that your bank will make only sound loans and no reason to think your bank's business model isn't sound. So it's totally different. (It would be different if, for example, you knew the bank was going to take all the money it borrowed to Vegas.)

And I'm pretty sure that's what everyone who deposited did. That they believed that Patrick could deliver what he said he's delivering, not that what he said is true. If I had chosen to accept his claims, I'd be on the belief that Patrick could deliver. I would remain in doubt he had exposure has I can't verify that and would neither claim to be true what I cannot verify.

People where lending him funds for his business like they deposit at a bank so it can do it's business of loaning funds/safekeeping. The contract was that he'd deliver X interest and would allow withdrawal anytime.

When someone accepts a claim that the seller is delivering something, he's not acknowledging that the claim is a requirement for the contract to be executed or that the claim is true. That person acknowledge that they pay for the delivery of that claim. The buyer is not at tort for believing the seller can deliver. The belief the seller would deliver is not the cause of the damage. The damage is solely on the seller's shoulder for not delivering.

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As you said however, it would be very hard to enforce in a court and as such, people might be blamed for not being careful enough as to who they extend their money to. But that doesn't free the borrowers from delivering upon their claims because the lender believed the borrower could deliver those claims. He should get a scammer tag for not delivering what he claimed he would deliver until he can deliver deposits back in full.

[darkmule]

However, I think seeing it as common mistake is more sensible because I don't think it's possible to enforce the contract as agreed at all since the agreement was about a loan portfolio that didn't exist in the form the agreement presumed. But you get the same result either way. It depends on how you try to construe the terms of a vague agreement.

I believe you are exaggerating the scope of the common or mutual mistake doctrine.  This doctrine only applies when the mistake is so fundamental to the nature of the agreement that either the parties both failed to understand the actual terms of the contract, and hence there was no meeting of the minds, or the misunderstanding essentially resulted in an agreement that is impossible to carry out.

For example, Boba Fett hires Han Solo to do the Kessel Run in less than twelve parsecs, unaware that the parsec is not a unit of time.  Since the agreement is effectively meaningless, it would not be fair to force Han Solo to attempt to do this.  However, even in this case, Han Solo would have to return any money he took as part of the agreement.  He doesn't just get to keep it.

In this case, whatever underlying facts there are are not fundamental.  The agreement itself is quite simple, at least the part that some people are attempting to enforce.  Harnett took money from a number of people, which was supposed to be payable on demand.  There was no mistake about that part of the agreement. 

That there were numerous financial blunders by everyone involved doesn't void the contract, any more than a contract is voided because the price of soybeans went up in the months between when a contract for soybeans was signed and when delivery is due.

I could probably count the number of cases I've seen in the real world where common mistake was found and voided a contract on the fingers of one hand.  After suffering a horrible industrial accident.

I can't think of a single case in which such a mistake completely absolved the one who breached the contract of having to pay back money.  If nothing else, that would be considered unjust enrichment.

[Coinoisseur]

Pretty sure JoelKatz is arguing that the mutual idea that bitcoin loans of the sort Patrick was making could be free of significant Pirateat40 risk did create a situation where "the misunderstanding essentially resulted in an agreement that is impossible to carry out."

In a round about way he's referring to all the warnings given in these very forums regarding the dangerous situation created by having such high interest instruments being traded on the wrong-headed presumption that they carried a low default risk.

JoelKatz can correct me if I'm misunderstanding him.

FYI Bitcoin.me has created a separate post regarding Patrick's Kraken Fund and Badbear is looking for citations of where Patrick made disingenuous claims in regards to the fund as well as a information on what Patrick has done to try to meet his Kraken obligations. Imo, that situation seems more straightforward.

https://bitcointalk.org/index.php?topic=124152.0

[MPOE-PR]

FYI Bitcoin.me has created a separate post

Yes, he's announced this earlier so I guess everyone's aware but pretty much nobody sees the point in splitting the discussion up. For obvious good reasons.

[MPOE-PR]

I believe you are exaggerating the scope of the common or mutual mistake doctrine.  This doctrine only applies when the mistake is so fundamental to the nature of the agreement that either the parties both failed to understand the actual terms of the contract, and hence there was no meeting of the minds, or the misunderstanding essentially resulted in an agreement that is impossible to carry out.

For example, Boba Fett hires Han Solo to do the Kessel Run in less than twelve parsecs, unaware that the parsec is not a unit of time.  Since the agreement is effectively meaningless, it would not be fair to force Han Solo to attempt to do this.  However, even in this case, Han Solo would have to return any money he took as part of the agreement.  He doesn't just get to keep it.

In this case, whatever underlying facts there are are not fundamental.  The agreement itself is quite simple, at least the part that some people are attempting to enforce.  Harnett took money from a number of people, which was supposed to be payable on demand.  There was no mistake about that part of the agreement.  

That there were numerous financial blunders by everyone involved doesn't void the contract, any more than a contract is voided because the price of soybeans went up in the months between when a contract for soybeans was signed and when delivery is due.

I could probably count the number of cases I've seen in the real world where common mistake was found and voided a contract on the fingers of one hand.  After suffering a horrible industrial accident.

I can't think of a single case in which such a mistake completely absolved the one who breached the contract of having to pay back money.  If nothing else, that would be considered unjust enrichment.

Yeah, all this was pointed out to him back somewhere on page 2.

*Ah, here, was page 7. Part III specifically.

[darkmule]

Pretty sure JoelKatz is arguing that the mutual idea that bitcoin loans of the sort Patrick was making could be free of significant Pirateat40 risk did create a situation where "the misunderstanding essentially resulted in an agreement that is impossible to carry out."

Yes, and I was pointing out that legal or factual impossibility is a much more narrow concept than that.  The fact that you happen to have run out of money due to mismanagement is not impossibility, but merely difficulty.  Impossibility is something like agreeing to build a house on a barrier island that just got washed away by a hurricane, that is, something outright impossible.

[Coinoisseur]

FYI Bitcoin.me has created a separate post

Yes, he's announced this earlier so I guess everyone's aware but pretty much nobody sees the point in splitting the discussion up. For obvious good reasons.

Except in that thread Badbear (Moderator) is requesting info...