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UNITED STATE BANKRUPTCY COURT1
FOR THE DISTRICT OF MONTANA\2
BILLINGS DIVISION3
4
In re:5
Chapter 76
7
PETER CLIFTON NORTHCUTT, No. 09-60946-RBK8
Debtor.9
_____________________________/10
ADVERSARIAL COMPLAINT TO DETERMINE NONDISCHARGEABILITY OF11
DEBT OWED TO CREDITOR NEIL DIAMOND AND CREDITOR ALBERT12
DIAMOND AS ASSIGNEE PURSUANT TO FINAL CONSENT JUDGEMENT13
ENTERED IN THE SIXT DISTRICT COURT IN AND FOR SWEETGRASS COUNTY,14
MONTANA15
16
Plaintiff, Neil diamond, Pro Se and Plaintiff, Albert Diamond, Pro Se, files this17
Complaint under Section 523 of the Bankruptcy Code, 11 U.S. C. 523, objecting to the pre-18
petition debt owed by the Defendant, Peter C. Norhtcutt, the debtor herein (the Debtor), to the19
Plaintiffs, and in support hereof alleges as follows:20
Jurisdiction and Venue21
1. Subject matter jurisdiction is conferred upon this court by 28 U.S.C. 157 and 1334,22and 11 U.S.C. 523.23
2. Venue in the Billings Division, District of Montana is proper under 28 U.S.C. 241391(b) and (c).25
3. The Adversary Proceeding is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(1)26
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4. The Adversary Proceeding relates to In re: Peter C. Northcutt, No. 09-60946-RBK27(Bankr. B.D. MT) (Chapter 7), now pending in this Court (the Bankruptcy Case).28
The Plaintiff, Neil Diamond is an unsecured judgment creditor with a claim against29
the Debtor in the amount of ONE HUNDRED SIXTY FIVE THOUSAND30
DOLLARS ( $165,000.00) pursuant to a Final Consent Judgment entered by31
Honorable Wm. Nels Swandall on the 27th day of February, 2009 in and for the Sixth32
Judicial District, Sweet Grass County, Montana in the case styled Neil Diamond and33
Albert Diamond v. Peter C. Northcutt, Case No. DV 2006-25 (6th District CT. MT)34
(the District Court Case). (Exhibit #1 Attached hereto)35
5. The Plaintiff, Albert Diamond is an unsecured indirect judgment creditor with claim36against the Debtor by virtue of a partial assignment of the proceeds of the Final37
Consent Judgment from the Plaintiff, Neil Diamond in the amount of FORTY38
THOUSAND DOLLARS.39
The Parties40
6. Plaintiff, Neil Diamond is a resident of Miami-Dade, Florida, above the age of41majority and sui juris in all respects.42
7. Plaintiff, Albert Diamond is a resident of Miami-Dade, Florida, above the age of43majority and sui juris in all respects.44
8. Defendant, Peter C. Northcutt, the Debtor is a resident of Carbon County, Montana45who at all times material to the complaint filed in the district Court ( the district46
court Complaint) while acting alone and/or in concert with others, has formulated,47
directed, controlled and participated in the material acts and misdeeds of fraud,48
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misrepresentations and deceptive practices including the acts set forth in the District49
Court Complaint. (Exhibit #2 Attached hereto)50
9. On or about the 21st day of May, 2009, the Debtor filed a voluntary petition for relief51under Chapter 7 of the Code, thereby commencing the Bankruptcy Case.52
Course of Proceedings53
10.On December 29, 2006, Plaintiffs, Neil Diamond and Albert Diamond filed the54District Court Complaint against the Defendant, Peter C. Northcutt, alleging: 1.55
breach of fiduciary duty, 2. fraudulent concealment, 3. breach of contract, 4.56
rescission of a written contract based on fraud and misrepresentation in the57
inducement, 5. actual and constructive fraud, 6. breach of contract/breach of58
warranty, 7. infliction of emotional distress, 8.negligent misrepresentation involving59
pecuniary interest in a business transaction, 9. violating the Montana Deceptive Trade60
statute, and 10. RICO violations beginning on or about December 1998 through61
January 2006.62
11.Trial by jury was convened on the 23rd of February, 2009. After two days of63testimonial and documentary evidence was adduced at trial the plaintiff and defendant64
rested their respective cases.65
12. At the close of all evidence and testimony offered by the Plaintiff, Neil Diamond,66Plaintiff, Albert Diamond and the Defendant, Peter C. Northcutt, the Plaintiffs67
jointly voluntarily dismissed count 10. RICO Violations, without prejudice and68
moved for a Directed Verdict as to count 3. and count 4. of the complaint.69
13. The Court Granted the Plaintiffs Motion for a Directed Verdict on Count 3., Breach70of Contract and Count, and 4. Recession of a Written Contract Based on Fraud and71
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Misrepresentation in the Inducement and found as a matter of law and fact the72
Defendant, Peter C. Northcutt is indebted the Plaintiff, Neil Diamond the amount of73
Forty Nine Thousand, Nine Hundred Ninety Dollars ($49,990.00).74
14. The Defendant, Peter C. Northcutt did not seek appellate review of the directed75verdict of count 3 and count 4 thereby accepting the judicial factual finding that76
Northcutt had committed the wrongdoing of fraud which lead to financial damages to77
the Plaintiff, Neil Diamond.78
15. The Honorable Court found as a matter of law and fact the Plaintiffs sufficiently79established a prima facie case in reference to Counts, 1. Breach of a Fiduciary Duty,80
2. Fraudulent Concealment, 5. Actual and Constructive Fraud, 6. Breach of81
Contract/Breach of Warranty, 7. Infliction of Emotional Distress, and 8. Negligent82
Misrepresentation Involving Pecuniary Interest in a Business Transaction, to allow83
the jury to deliberate the issues of liability and damages.84
16. Prior to closing argument and the jury receiving the case for deliberation, the parties85agreed on the record to the Final Consent Judgment which is attached hereto and86
marked exhibit #1.87
17.The court made the following findings as contained in the attached Final Consent88Judgment dated the 27th day of February, 2009:89
a. The parties had knowingly, voluntarily, freely and intelligently agreed to the90entry of this Final Consent Judgment and the terms set forth herein.91
b. The parties acknowledged under oath the terms set forth in this consent92agreement and this agreement are in the individuals best interests of the93
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Plaintiff, Albert Diamond, Plaintiff, Neil Diamond and Defendant, Peter C.94
Northcutt.95
c. The Defendant, Peter C. Northcutt agrees this judgment is non dischargeable96in Bankruptcy, pursuant to Section 523 of the United States Bankruptcy Code97
and non dischargeable in Bankruptcy due to the fact the liability and this98
judgment is entered based on acts of wrongdoing including the breach of the99
Defendant, Peter C. Northcutt s fiduciary duty, recession of a written contract100
based on fraud and misrepresentation in the inducement, breach of contract,101
negligent misrepresentations involving pecuniary interest in a business102
transaction, conduct which caused the infliction of emotional distress,103
constructive and actual fraud causing injury to the Plaintiff, Neil Diamond.104
18.The Final Consent Judgment has been duly recorded by the Clerk of the Court of the105Sixth Judicial District, Sweet Grass County, Montana.106
19.On the 27th day of February, 2009 the Honorable Clerk of the Court, Deanna Novotny107issued a Writ of Execution directing the Carbon County Sheriff s Office to satisfy the108
judgment from the personal property of the Defendant, Peter C. Northcutt.109
20.The Sheriff of Carbon County, Montana served the Writ of Execution on the110Defendant, Peter C. Northcutt on the 21st day of March, 2009 but failed to seize111
property.112
Defendants Course of Conduct113
21.In December of 1998 the Defendant, PETER C. NORTHCUTT, initiated114correspondence and information soliciting investment capital to fund the115
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development of a precious metal gold mining and milling operation, referred to as116
Gold Hill Project located in Sweet Grass County, Montana.117
22.JOHN DORIS, DDS, introduced the Plaintiff, NEIL DIAMOND, DDS, to the118Defendant, PETER C. NORTHCUTT. The Defendant, PETER C.119
NORTHCUTT, subsequently offered the investment opportunity to the Plaintiff,120
NEIL DIAMOND, DDS.121
23.Defendant, PETER C. NORTHCUTT, intentionally provided written122representations pertaining to the investment s financial viability and potential profit,123
as an inducement to be relied upon by the Plaintiff, NEIL DIAMOND, DDS in124
deciding to invest in the opportunity.125
24.The Defendant, PETER C. NORTHCUTT, continuously and repeatedly, in written126statements and verbal statements, represented himself as a qualified professional with127
a Doctorate degree in Geology in mining exploration, mining engineering and ore128
processing, as an inducement to be relied upon by the Plaintiff, NEIL DIAMOND,129
DDS in deciding to invest in the opportunity.130
25.On or about January 5th, 1999, the Plaintiff, NEIL DIAMOND, DDS, JOHN131DORIS, DDS and the Defendant, PETER C. NORTHCUTT entered into a written132
agreement to fund further development by the Defendant, subject to formation of a133
formal structured agreement pending future events. The initial investment capital134
tendered by the Plaintiff, NEIL DIAMOND, DDS were in the amount of SIXTY135
SIX THOUSAND, SIX HUNDRED, FORTY FIVEDOLLARS, ($66,645.00),136
between January 1999 and July 31st , 2000.137
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26.On or about July 7, 1999, the Plaintiff, NEIL DIAMOND, DDS, JOHN DORIS,138DDS, PAUL GUILLEMETTE and the Defendant, PETER C. NORTHCUTT139
entered into a written contract titled PARTNERSHIP-140
SERVICE/PERFORMANCE AGREEMENT subtitle GOLD HILL PROJECT141
27.Prior to October of 2000 the Defendant, PETER C. NORTHCUTT begins to142construct a mill site and tailings impoundment off site of the proposed mine. The143
initial proposal to mill and off load at the mine site was illegal and not an option as144
the proposed mine is located in the Gallatin National Forest, Big Timber Ranger145
District which prohibits such usage. This is in direct conflict with the Defendant,146
PETER C. NORTHCUTTS initial representations and budgetary projections.147
28.The Defendant, PETER C. NORTHCUTT failed to follow the regulations of the148CFR which mandates the required process of the permitting procedure. As a result the149
appropriate Surface Use Determination Report prior to an Environmental Assessment150
were not conducted and the permitting process was insufficient.151
29.In January 2001, the United States Forestry Service advised the Defendant, PETER152C. NORTHCUTT that the entire permitting process had to be resubmitted anew in153
order to include all the appropriate reports, studies as required by the regulatory State154
and Federal Agencies.155
30. In November 2001, the District Ranger of the, Gallatin National Forest, Big Timber156District, issued a Decision Notice authorizing the exploration and development of the157
project after an appropriate Plan of Operation was submitted by the Defendant subject158
to review and acceptance by the United States Forest Service. The Decision Notice159
was appealed and subsequently the decision was affirmed in January of 2002.160
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31.Due to the Defendant, PETER C. NORTHCUTTS, lack of knowledge and161understanding of administrative procedure and the Code of Federal Regulations the162
Plaintiff, ALBERT DIAMOND, JD, was solicited and agreed to travel to Big163
Timber, Montana to assist in preparing an appropriate appellate response as an164
interested party pursuant to 36 CFR 215 .165
32.The Defendant, PETER C. NORTHCUTT was of the opinion that a response to the166appeal was not warranted, required or permitted. As a result the Defendant, PETER167
C. NORTHCUTT and the Plaintiff ALBERT DIAMOND, JD had to work for168
several days without rest to submit the response before the deadline to defend the169
Decision Notice from being reversed.170
33.The Defendant, PETER C. NORTHCUTT negotiated with the PlaintiffALBERT171DIAMOND, JD to enter into a consulting agreement to assist with agency related172
regulatory requirements and duties as set forth in the CONSULTING AGREEMENT173
dated November 12, 2001.174
34.The Defendant, PETER C. NORTHCUTTS representations affirmatively stated175that the mine would yield large amounts of gold at considerable value, that he had a176
PHD in geology, and that he was able to find gold deposits due to his extreme177
expertise that previous claimants, including Kennocott, had failed to reveal due to178
their inadequate testing of geological sampling. The Defendant, PETER C.179
NORTHCUTT, produced assay test results, maps and financial projections as an180
inducement to enter into the contract with LODESTAR.181
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35.The Defendant, PETER C. NORTHCUTT knew or should have known that the182representations were in fact false and unsupported by acceptable science and mining183
standards with in the professional community.184
36.The Plan of Operation was approved in April of 2002 with a reclamation bond185assessment of $420,320.00 required to be posted prior to beginning operation of the186
mining activity by LODESTAR.187
37.Prior to August 2002 the Defendant, PETER C. NORTHCUTT was solely and188individually responsible and controlled all financial issues, including the payment of189
debts, employee payroll, unemployment tax, FICA and social security payments,190
workmen compensation insurance payment and purchasing for LODESTAR.191
Additionally the Defendant was responsible for all banking records, reconciliation of192
accounts and budget projections of the project.193
38.In August 2002 the Defendant, PETER C. NORTHCUTT requested the Plaintiff,194NEIL DIAMOND, DDS assist in the administration and management of the financial195
records ofLODESTARdue to the responsibilities of the actual mining project. The196
check book and accounts payables were in disarray, not current and in past due status.197
39.Due to the Defendant, PETER C. NORTHCUTT s failure to realize, mine and198 process gold ore, as he had promised and represented continuously through the199
project, there were no funds available to service the accruing liability for unpaid200
employment wages and 4th quarter payroll taxes in November 2002.201
40.In order to remain in operation, the Plaintiff, NEIL DIAMOND, DDS loaned202FORTY NINE THOUSAND, NINE HUNDRED NINETY DOLLARS to the203
Defendant, PETER C. NORTHCUTT to reimburse LODESTARfor draws paid to204
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the Defendant, PETER C. NORTHCUTT. Due to the nature of the loan205
(unsecured) and high risk of default, the Plaintiff, NEIL DIAMOND, DDS received206
increasing interests in Defendants shares, up to 1.5 shares, in the event of default of207
payment as an incentive to pay timely and as penalty for failure to pay.208
41.The Defendant, PETER C. NORTHCUTT represented to the Plaintiff, NEIL209DIAMOND, DDS that precious ore would be ready for process and sale within two210
weeks as an inducement for the Plaintiff to agree to loan the funds to the Defendant.211
42.The Defendant, PETER C. NORTHCUTT knew the representations were false at212the time he communicated it to the Plaintiff.213
43.The Plaintiff, NEIL DIAMOND, DDS relied upon the truth of the Defendant s214representation in agreeing to loan the funds and was justified in reliance of the215
statement.216
44.The statement was material to the decision by the Plaintiff to loan the funds to the217Defendant.218
45.No precious ore was processed or sold as represented by the Defendant and, in fact,219no precious metal has ever been mined, milled, processed and sold from the220
LODESTARoperation.221
46.By March of 2003, having failed to produce any precious metal for income, the222Defendant, PETER C. NORTHCUTT, suggests building a processing mill in an223
attempt to process platinum group metals which the Defendant had represented was224
present in the mine as of January 2003. The Defendant knowingly and intentionally225
misrepresented that low grade sulfide gold would be processed and create an226
immediate stream of income to fund further production as a result of a sale to M & W227
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Refining c/o Roy Moen on Virginia City, Montana and the mill would facilitate this228
process. This representation of the Defendant, PETER C. NORTCUTT was false and229
intended to mislead and assist of the Defendant s actions of concealment of the on230
going fraudulent scheme and representations.231
47.The Defendant, PETER C. NORTHCUTT knew or should have known his232representations were untrue and that he did not have scientific confirmation or the233
qualifications to assert representations with any certainty to be relied on by investors234
and the Plaintiffs that the operation would be or could be profitable.235
48.The Defendant, PETER C. NORTHCUTTS intention was to conceal the lack of236
precious ore and induce additional investment capital to insure the operation would237
continue and he would continue to receive funds.238
49.The mill fails to work properly and the mine fails to produce any marketable product239 by May 18th, 2005 the day the Defendant, PETER C. NORTHCUTT formally240
resigns as Superintendent of Operations in LODESTAR and no longer provides241
services as contracted.242
50.The Defendant, PETER C. NORTHCUTT from December 1998 through his243resignation continuously represented that he possessed a doctorate degree in geology244
and the expertise in the exploration, mining and processing of precious metals,245
including the development of the physical mill construction and appropriate protocols246
for processing marketable precious metals.247
51.The Defendant, PETER C. NORTHCUTT from December 1998 through his248resignation continuously represented, in both verbal and written statements, that he249
possessed educational qualifications of PhD in Exploration Geology and M.S. in250
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Mining and Process Engineering, conferred to him by reputable accredited251
universities. During this period the Defendant, PETER C. NORTHCUTT received252
financial gain from investment capital funds as all his living expenses, maintenance253
and miscellaneous expenditures were provided by LODESTARat his discretion.254
52. In fact the Defendant, PETER C. NORTHCUTT has not been awarded the degree255of PhD in Exploration Geology.256
53.The Plaintiff, NEIL DIAMOND, DDS, detrimentally relied upon the false257representations of the Defendant, PETER C. NORTHCUTT in deciding to invest in258
excess ofSIXTY SIX THOUSAND, SIX HUNDRED, FORTY FIVEDOLLARS,259
($66,645.00), and extending credit to the Defendant, PETER C. NORTHCUTT, in260
the form of a loan, in the amount of FORTY NINE THOUSAND, NINE261
HUNDRED, NINETY DOLLARS, ($49,990.00).262
54.The Defendant, PETER C. NORTHCUTTS initial written and verbal263representations were negligently untrue, intentionally deceptive, misleading, contrary264
to the standard of truth established within the mining community, materially false265
and/or deceptive in order to induce the Plaintiff, NEIL DIAMOND, DDS to execute266
agreements and incur pecuniary obligations resulting in pecuniary loss and in order to267
induce the PlaintiffALBERT DIAMOND, JD to incur the obligation and duties as268
set forth in the agreement without potential compensation, as well as to induce other269
unnamed investors to incur financial obligations resulting in loss of funds.270
55.The Defendant, PETER C. NORTHCUTT knew or was reckless in not knowing271that his representations to the investors, including the Plaintiffs regarding the Gold272
Hill Project and subsequently LODESTAR were false and misleading because273
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among other things, he did not conduct due diligence to verify the truth of what he274
had represented to the Plaintiff and investors in the initial representations, including275
the procedure to obtain a permit, the amount of funds required to complete the276
permitting process, the actual value of the ore reserve, the correct procedure to277
determine the presence of a recoverable ore reserve, the correct designing of a278
processing mill, the correct construction of a processing mill, the correct procedure to279
process precious ore specifically obtained from the Gold Hill Project and whether the280
funds would be safe from loss.281
56.Additionally, the Defendant represented the development of the mine had begun282
before acquiring the approval from the United States Forest Service and provided283
actual financial projections of return on investment based upon his unproven precious284
ore representations. In addition the Defendant continued to solicit investors even285
though he had no idea how he was going to find or process precious ore with in the286
claims the Defendant was mining.287
57.Defendant, PETER C. NORTHCUTT knew or had reasonable grounds to believe288that his statements and omissions described above were untrue or misleading.289
58.The Defendant, PETER C. NORTHCUTT, through his tenure as a member and290supervisor of operations of LODESTAR, continued on an intentional course of291
conduct to conceal the prior misdeeds, by misstating test results, failing to disclose292
detrimental results fundamental to determining the status of the viability of the mine293
and mill, improperly advising on the direction of operations and promising the294
production of positive economic results were in the near future.295
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59.In January, 2006, DC6, LLC prepared a Due Diligence Report, staffed by Cristal296Clear Mining, under the supervision of Les Cowie as Chairman, Chuck Phoenix as297
legal compliance officer, Michael Hughes as Financial Officer, David Hurst as298
Mining Operations Officer and Paul Tat as Geological Consultant.299
60.The due diligence investigations concluded that traces of gold and platinum metals300are present at the mine site but the appropriate and accepted core drilling model301
would have to be conducted to determine the presence of an ore body which302
contained a profitable viable sampling of precious metals.303
61.The Due Diligence team determined that a considerable investment was prematurely304
spent on the development of Mill Operations. The Mill operation was not designed to305
handle the processing of ore in the event any recoverable product was confirmed and,306
as a result the Mill Operation needed to be disposed of to recover a discounted307
percentage of wrongfully spent investment capital.308
62.After restructuring LODESTARand raising an investment capital in excess of ONE309MILLION DOLLARS ($1,000,000.00) in order to conduct the appropriate and310
required core drilling model, assays and scientific tests, in an attempt to prove the311
Defendant, PETER C. NORTHCUTTS initial representations correct, accurate and312
well founded, the final scientific conclusion was issued that the assay results were313
sub-economic.314
63.The Defendant, PETER C. NORTHCUTTS initial representations and continuous315representations were unreliable representations of fact, scientifically inaccurate,316
scientifically unsupported, beyond replication and did not validate the presence of an317
Ore Body in LODESTARS claim.318
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64.By failing to take steps to prevent, disclose, and minimize the harm from the319Defendant s own incompetence and the Defendant s ongoing acts of disclosure of his320
incompetence, errors and material misrepresentations the Defendant, PETER C.321
NORTHCUTT breached the fiduciary duty owed the Plaintiffs.322
65.The Defendant, PETER C. NORTHCUTT is guilty of violating his duty of care by323engaging in grossly negligent and/or reckless conduct, intentional misconduct and/or324
knowingly violating the law as mandated in Montana Statute 435 section 17(3) and325
discharging his duties inconsistent with the obligation of good faith and fair dealing326
in violation of Montana Statute 435 Section 17(4).327
66.The Defendant, PETER C. NORTHCUTT intentionally deceived the Plaintiff by328denying the existence of a written report from MONTANA TECH.329
67.In fact the requested written report had been issued by CAMP/ MONTANA TECH,330dated July 7, 2003, at the request of the Defendant, PETER C. NORTHCUTT, of331
material samples marshaled and picked by the Defendant, which concluded:332
Based on the samples received at CAMP, (Montana Tech),333
the Lodestar ore contains little or no precious metals including334
Pt, Pd, Rh, Ir, Ru Os, Au or Ag. As such, metallurgical processing335
Is not required for this ore336
337
68.The report was finally disclosed in 2005 by a third party after the resignation from338Lodestar of the Defendant, PETER C. NORTHCUTT.339
69.The Defendant, PETER C. NORTHCUTT intentionally and continuously deceived340the Plaintiff, NEIL DIAMOND, DDS issuing verbal statements calculated to mislead341
the Plaintiff and all members as to the true status of the rock being mined and the342
potential of being marketed as valuable precious metal.343
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70.The actions of the Defendant, PETER C. NORTHCUTT were designed to defraud344the Plaintiff and conceal past deceptions and frauds.345
71.The actions of the Defendant were fraudulently done to conceal the fact that346Defendant, PETER C. NORTHCUTT had committed acts of negligence, gross347
negligence, fraud, theft, and other wrongful conduct described herein, and have348
engaged in concerted action to commit such wrongful acts.349
72.The actions of the Defendant, PETER C. NORTHCUTT were designed for the350 purpose to suppress and minimize public knowledge of the rampant acts of351
negligence, gross negligence, fraud, theft, and deception.352
73.Thus, Defendant s actions in furtherance of this fraudulent concealment are a353proximate cause of the economic loss and damages herein.354
74.As a fiduciary, the Defendant, PETER C. NORTHCUTT owed a duty to the355members of the GOLD HILL PROJECT and LODESTAR, which the Plaintiff,356
NEIL DIAMOND, DDS and the PlaintiffALBERT DIAMOND,JD were members357
in good standing for value, to inform the members, including the Plaintiffs of the fact358
that the initial representation of a locatable valuable ore body was unsupported by359
accurate scientific data performed in manner consistent with the minimal acceptable360
standard of the mining community, that the Defendant, PETER C. NORTHCUTT361
was in fact under qualified to make representations in the exploration and362
development of a mining and milling operation, that the staffing of the GOLD HILL363
PROJECT and LODESTARwas unqualified to perform the required due diligence364
to develop a viable mining and milling operation or call into question the365
misrepresentations of the Defendant to minimize the financial loss of the capital366
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investment and that the projects financial viability and return was minimum to367
nonexistent based on the accepted minimum standards of the mining community.368
75.By reason of the failure to make these disclosures to the Plaintiffs, and the resulting369detrimental reliance thereon, the Defendant, PETER C. NORTHCUTT is guilty of370
actual and constructive fraud.371
76.The Plaintiff, NEIL DIAMOND, DDS , as well as approximately 85 investor372members, were subject to concealment of the true nature of the mining project, to wit;373
the lack of a locatable, financially viable precious ore body and a 5 year course of374
conduct which subjected the Plaintiff to physical, mental, emotional, and financial375
abuse and were not provided financial gain.376
77.The Defendant, PETER C. NORTHCUTT breached his express and implied377contract and warranty to the Plaintiff, NEIL DIAMOND, DDS as well as all378
members ofLODESTAR MINING AND EXPLORATION LLC.379
78.The Defendant, PETER C. NORTHCUTT represented that in fact his research380confirmed financially viable precious ore body had been located within the permit381
claim and that he was qualified to proceed with a mine and the processing of the ore382
for profit.383
79.The Plaintiffs were unaware of the falsity of the representations, were justified in384relying upon the truth of the representations and invested substantial funds of capital385
and/or time for services rendered for the development of the project by the Defendant386
based on the representation.387
80.The Defendant s representations were untrue and unsupported by prudent accepted388mining industry standards to determine the presence of a locatable precious ore body389
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and the justification for proceeding with the development of the mine and milling390
process.391
81.The Defendant, PETER C. NORTHCUTT made the representations without any392reasonable ground for believing it to be true.393
82.The Defendant, PETER C. NORTHCUTT, in thecourse of promoting and engaging394in his business and in the operation of the mining exploration, development and mill395
construction purposely and/or knowingly used false measures for the sale of the396
mining operation and falsely recording the actual quality and/or quantity of the397
precious ore sample grabs.398
83.The Defendant in the course of promoting and engaging in his business of the399operation of the mining exploration, development and mill construction purposely400
offered for sale and/or exposed for sale adulterated and/or mislabeled commodities as401
an inducement to obtain capital investment from unwary individuals for precious402
metal ore extraction for sale in the open market place.403
84.By engaging in the deceptive and fraudulent business practices by the Defendant404/Debtor, Peter C. Northcutt, detailed herein above, investors through out the United405
States and throughout the world have suffered economic loss in excess of 7 million406
dollars.407
85.The Debtor is liable for the Final Consent Judgment.408Nondischargeablilty of the State Final Consent Judgment409
86.Debts for money, property, or services obtained by false pretenses, fraud, false410representations or actual fraud are not dischargeable. 11 U.S.C. 523(a)(2)(A).411
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87.The false representations of material facts set forth in the above paragraphs constitute412deceptive acts and practices in violation of Montana Statutes 435 Sec.17(4), 39-71-4132909 and30-14-101,414
88.The Debtor s activities described here in above were conducted with knowledge that415he was engaged in fraudulent schemes and with knowledge of the falsity of the416
representations, or with the reckless disregard of the truth or falsity of the417
representations.418
89.The Debtor injured investors, including the Plaintiffs, by knowingly engaging in419fraudulent schemes and knowingly making false representations to investor members420
including the plaintiffs. These representations were material to the plaintiffs and421
investors in deciding to contract with the Debtor for the purposes of the mining422
operation.423
90.Investors, including but not limited to the plaintiffs, who contracted with the debtor424for the purchase of shares in the mining operation suffered losses totaling at least425
SEVEN MILLION DOLLARS.426
91.The Debtor s activities described here in above constitute false representations and427actual fraud. Consequently, the Debtor s debt to the Plaintiffs combined pursuant to428
the assignment and the Final Consent Judgment is one for money, property or429
services obtained by false representations or actual fraud, and is not dischargeable.430
11U.S.C. 523(a)(2)(A).431
92. As reflected in the Final Consent Judgment, entered after trial on the merits,432submitted herewith, the Debtor has consented to the non-dischargeablity of the Final433
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Consent Judgment owed by the Debtor to Plaintiff, Neil Diamond and indirectly to434
Plaintiff, Albert Diamond by Partial Assignment of Proceeds.435
WHEREFORE, the Plaintiff, Neil Diamond and Plaintiff, Albert Diamond requests that436
this Honorable Court:437
(a)Enter the Final Consent Judgment submitted herewith determining the Final438Consent Judgment in favor of the Plaintiff, Neil Diamond and indirectly the439
Plaintiff, Albert Diamond, as partial assignee of proceeds, and against the440
Debtor, entered by the Sixth Judicial District, Sweet Grass County, Montana441
in the case styled Neil Diamond and Albert Diamond v. Peter C. Northcutt,442
Case No. DV 2006-25 (6th
District CT. MT) (the District Court Case).443
(Exhibit #1 Attached hereto) is nondischargeable; and444
(b)Granting such other and further relief as this case may require and the Court445deems just and proper.446
Respectfully submitted,447
Dated: August 9, 2009 _____________________________448Plaintiff, Neil Diamond, Pro Se4491060 West 47th Street450Miami Beach, FL 33140451786 343 5400452
453454
_____________________________455
Plaintiff, Albert Diamond, Pro Se4561060 West 47th Street457Miami Beach, FL 33140458786 426 8788459
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