I think this is closer to the mark. I think Prosper 1.0's problem wasn't that it intended to defraud people, it's just that like many dot-com/dot-bomb companies, management's big, big plans sounded very nice at the beginning, but it wasn't actually able to execute very well on them because operating a business in the real world is a lot harder than just setting up a web site and watching the money roll in. They hired a collections person; they started collections, but things fell apart and they didn't really end up doing very much. I suspect they were every bit as naive and incompetent, and every bit as over-impressed with and blinded by the rush of their own sense of genius and how they were going to change the world, as the managements of many failed dot-com startups were.
Given how low the offers they were getting from debt buyers in 2008 were compared to what they were getting in 2006 and 2007 and what they were expecting, I don't think the decision to try doing collections on their own was some sort of fraud. I think it may even have been a reasonable strategy, if they had been able to execute on it competently. it's quite possible that if they had accepted 3% on the dollar, someone would now be complaining that since they had gotten five or ten times that the previous year, failing to go for more would itself be a breach of duty to the investors.
Lawyers get to look at things in hindsight. But one has to see things as they were on the ground at the time. If things had gone the other way -- Prosper had taken debt buyers' offers of 3% or less, and you had evidence that other peoples' in-house collections teams have been able to rake in considerably more if only Prosper had had the sense to try it -- would you have been happy?