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[ira01]

I am, however, considering filing a State Bar complaint against Prosper's lawyers for misleading the Court, and also sending the LRA to the U.S. Attorney in Ohio with a request for him/her to consider investigating Prosper for perjury charges. The conduct of Prosper and/or its attorneys truly offends me as an officer of the court.

Consider the S1 Prosper filed with the SEC.  Would it be a better document to show than the LRA?

I don't know about better, but worth including.  I think the LRA is the key document, because that is what creates and defines the legal relationship between Prosper and lenders, which is what Prosper mischaracterized in the BK filing.

[Mark12547]

I am, however, considering filing a State Bar complaint against Prosper's lawyers for misleading the Court, and also sending the LRA to the U.S. Attorney in Ohio with a request for him/her to consider investigating Prosper for perjury charges. The conduct of Prosper and/or its attorneys truly offends me as an officer of the court.

Consider the S1 Prosper filed with the SEC.  Would it be a better document to show than the LRA?

Prosper's Form S-1: http://www.sec.gov/Archives/edgar/data/1416265/000110465907078072/a07-27421_1s1.htm

From page 10 (Q&A):

Q:

What are Lenders?

A:

Lenders are individuals and institutions that register to bid on listings. Lenders are not lenders in the literal sense, as they do not actually lend their money directly to Borrowers; instead, Lenders make purchase commitments and purchase Notes representing Loans from Prosper to the Borrower. All Notes originated through the Platform are made by Prosper from its own funds, and then sold by Prosper to the Lender or Lenders who were the winning bidder or bidders on the listing that resulted in the Loan. Prosper uses the term “Lender” instead of “loan purchaser” or “note holder” for the sake of brevity and simplicity.

However, the Lender's Agreement seems to also be clear on the present operations (as opposed to the S-1 filing, which could be argued is the way things are planned to operate once SEC gives approval).

Lender Registration Agreement: http://www.prosper.com/account/common/agreement_view.aspx?agreement_type_id=8

* Note: Your role as a Prosper "Lender" is that of a loan purchaser, and your rights and obligations as a purchaser or prospective purchaser of loans originated in the Prosper marketplace are set forth below. Although you are referred to in this Agreement and on the Prosper website as a "Lender," you are not actually lending your money directly to Prosper borrowers, but are, instead, making loan purchase commitments and purchasing promissory notes from Prosper, representing loans made by WebBank, a Utah-chartered Industrial Bank ("WebBank") to borrowers and subsequently assigned to Prosper. All loans originated through Prosper are made to borrowers by WebBank from its own funds, and then subsequently sold and assigned by WebBank to Prosper. Prosper, in turn, will sell and assign such loans to the winning bidder or bidders on the listing without recourse to Prosper. WebBank is the originating lender and all loans are made under its charter as a Utah Industrial Bank. Prosper uses the term "Lender" instead of "loan purchaser" for the sake of brevity and simplicity.

It seems that WebBank originates the loans, assigns them to Prosper, and then Prosper sells the loans to the winning bidders.

[Fred93]

Lender Registration Agreement... It seems that WebBank originates the loans, assigns them to Prosper, and then Prosper sells the loans to the winning bidders.

The LRA details have changed over time.  If you look at a mid-2007 LRA, it says Prosper originates the loans from its own funds, and then sells 'em, just like the S1, which was also written mid-2007 says.

[ira01]

Lender Registration Agreement... It seems that WebBank originates the loans, assigns them to Prosper, and then Prosper sells the loans to the winning bidders.

The LRA details have changed over time.  If you look at a mid-2007 LRA, it says Prosper originates the loans from its own funds, and then sells 'em, just like the S1, which was also written mid-2007 says.

Exactly.  The WebBank venture didn't occur until this Spring or so.

[AndyAtlanta]

Fred,

I wasn't fully aware of this situation until I read your excellent summary.  This is truly a wakeup call for me (one of several lately).

Thanks for this clear summary of the situation.

[xraider]

Mark, to clarify, I sent the LRA in effect when the loan was obtained.

[Mark12547]

Mark, to clarify, I sent the LRA in effect when the loan was obtained.

Ah, one of those that says that Prosper originates the loan. Good call!

[Mtnchick]

Fred,

I wasn't fully aware of this situation until I read your excellent summary.  This is truly a wakeup call for me (one of several lately).

Thanks for this clear summary of the situation.

It's a good thing Fred won the lottery so he'd have the money to invest and therefore write his excellent blogs. 

[JammingJAY]

https://connect.prosper.com/t/4796.aspx

Huh?   

[ira01]

https://connect.prosper.com/t/4796.aspx

Huh?   

Holy crap -- Prosper Moderator is going to join Witchel on the unemployment line!  And Flyingmissile is going to join the ranks of the banned.

[Urbi_et_Orbi]

https://connect.prosper.com/t/4796.aspx

Huh?   

Holy crap -- Prosper Moderator is going to join Witchel on the unemployment line!  And Flyingmissile is going to join the ranks of the banned.

Hey now, damned if you do, damned if you don't.

[Flying Missle]

https://connect.prosper.com/t/4796.aspx

Huh?   

Holy crap -- Prosper Moderator is going to join Witchel on the unemployment line!  And Flyingmissile is going to join the ranks of the banned.

I didn't think they'd actually post that. I did it late yesterday sometime.

Fred, I hope your okay with the way I wrote that. I wanted to make sure I gave you credit for the work.

[Flying Missle]

https://connect.prosper.com/t/4796.aspx

Huh?   

Holy crap -- Prosper Moderator is going to join Witchel on the unemployment line!  And Flyingmissile is going to join the ranks of the banned.

They won't ban me, I'm an HR borrower. 

[bamalucky]

Can you repost it here? Some of us are banned 

[cubbiesnextyr]

Can you repost it here? Some of us are banned 

Basically, re-posted parts of Fred's blog:

As reviewed in Fred93's blog (which I can't link to but you can google search for).

Prosper has filed an answer in a bankruptcy filing and stated the following:

        Loans in a total amount of $25,000.00 were extended to the Plaintiff by individual bidders using Prosper’s website (“Lenders”) and the funds were disbursed to the Plaintiff by Prosper through direct deposit to the joint checking account of Defendant, Ashley Gaerke, and the Plaintiff. Prosper acted as the Plaintiff’s authorized agent to procure loans in the total amount of $25,000.00 from various Lenders on behalf of the Plaintiff. 

        By way of further answer, it is denied that Prosper loaned any money directly to the Plaintiff or Defendant, Ashley Gaerke.

This is in stark contrast to the Lender Registration Agreement [(LRA) which states

    Note: Your role as a Prosper "lender" is that of a loan purchaser, and your rights and obligations as a purchaser or prospective purchaser of Prosper loans are set forth below. Although you are referred to in this Agreement and on the Prosper website as a "lender," you are not actually lending your money directly to Prosper borrowers, but are, instead, purchasing loans from Prosper.

Further, the LRA says

    All loans originated through Prosper are made by Prosper Marketplace, Inc. from its own funds, and then sold by Prosper to the winning bidder or bidders on the listing.

Which is it Prosper?

Thanks for any help you can direct our way, and thanks to that Lender/Blogger for once again bringing something important to light.