I meet people that fall into the category of your Koh Phangan friend on a regular basis. People with substantial amounts of money and as you might expect, these powerful people don't take very kindly to being treated like children by government officials. Many of them have already moved over to the Elite VIsa, which as you may have heard is basically a "pay to play" system.
I think that this was the government's intention all along: To frustrate the rich folks into paying a fee to be left alone.