There's a big difference between a disagreeement about what regulatory category a new product falls in and fraud.
You seem to be interested in the "fraud" aspect of PMI's business operations. I'm not sure very many here have said what they have or have not done was criminally fraudulent. What I think is that much of their methods are unethical,
at least, and deceptive and not in keeping with their fiduciary responsibilities as a "loan originator." It looks like you came to Prosper about 1-1/2 years ago, so I ASSume you've read the history here. I'd remind you of the March 30, 2007 blacklisting of a number of participants, solely because one or two said something that wasn't praise; the total wiping out of their website forums, apparently to prevent a history being available and then their feeble attempt to intimidate prosperreports.com; Dr. D. Fuller's blabbing about his expertise, and record of not losing collections and then his repeated demonstrations that he probably has less of a clue about collections than the least of us here. There are established instances of PMI refusing to pursue fraudulent borrowers until forced to do so bay active lenders and/or law enforcement.
The history of Larsen and Witchel is about a couple of guys who operate in a dubious manner with apparently limited real knowledge about operating a business. Being unable to open a PDF file is a good example that just came to mind. So what I'm suggesting is that I don't understand your apparent "give 'em a chance" attitude toward an organization that has shown absolutely NO intention of operating in a functional, even legal manner IMO.