nid bankr advers complaint northcutt final draft

8/8/2019 NID Bankr Advers Complaint Northcutt FINAL DRAFT

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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

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_____________________________455

Plaintiff, Albert Diamond, Pro Se4561060 West 47th Street457Miami Beach, FL 33140458786 426 8788459

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nid bankr advers complaint northcutt final draft

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