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Former Nye County Commissioner Henry Neth and his partner Eric Frye agreed to pay $750,000 to 14 plaintiffs as part of a confession of judgment as a defendant in a court case involving a project called High Valley Estates just north of Kingman, Ariz.

The original complaint in the lawsuit filed Oct. 30, 2007 claims Neth and Frye recruited 62 people to invest from $25,000 to $200,000 in Stockton Jane LLC to purchase the 252-acre site a few miles north of Kingman.

"Parcel A was to be acquired in the name of Stockton Jane LLC but instead was acquired in the name of defendants Frye and Neth. Investors were never informed that the property would be taken in the individual names rather than in Stockton Jane LLC," the suit claims.

The suit also claims $2.4 million of the investors money was diverted to develop another 113-acre parcel as part of the Eagle View Group Inc., instead of being used to pay the mortgage and develop the original tract.

"Frye and Neth had a fiduciary duty to inform plaintiffs that they were diverting the investments to their own project and that they were not using the funds for parcel A," the suit claims.

Neth defeated David Cleveland 1,923-1,698 to win the District 3 race for county commissioner in November 2000. But he lost badly in the primary in his bid for reelection in September 2004, garnering only 110 votes, after a one-year term that included a controversial debate over banning brothels in Pahrump.

During a meeting with Stockton Jane LLC stockholders at the Las Vegas home of Jeff and Tina Rogers Sept. 27, 2007, Neth was videotaped telling investors he was required to put in a quarter-mile culvert for the other project at Eagle View. Neth said he had a commitment from a company in Phoenix, Ariz., to finance his Eagle View project, but in September 2006 it fell through and he was required to make a $700,000 payment.

Mortgage consultant Tim LuCarelli, who said he had represented clients like Rhodes properties and Focus Group, attempted to lure $800,000 in additional financing to stave off a Nov. 22 foreclosure of the 252 acres, increasing the number of shares sold from 435 to 825. It eventually was foreclosed.

Neth said the articles of incorporation for Stockton Jane LLC were filed April 15, 2005. The property was purchased at $23,500 per acre, a total of over $5.9 million. From May 3, 2005, to Aug. 18, 2005, they raised $1.45 million which covered a down payment of $900,000, another $160,000 in general administrative costs and $100,000 in preliminary engineering, he said.

"We continued to raise money, the market was great, people were throwing money at us hand over fist down there so we had no reason to believe there was going to be any kind of challenge getting us to where we're at right now," Neth said.

The property was master-planned for 957 6,000-square-foot lots, he said, but when it was brought before the Mojave County Board of Supervisors, dissenters led supervisors in August 2006 to adopt a planning commission recommendation for one-acre parcels. That would require only a $4 million investment, with less infrastructure, he said.

Jonathan Baktari, a Las Vegas partner in Shirazi LLC, one of the plaintiffs, who said he invested $100,000 in the project, said Neth got caught with his hands in the cookie jar.

Baktari referred to the following statement in the videotape where Neth admits his wrongdoing in the videotape:

"The cost of that concrete culvert was well over $1 million. So with the delay and the interest payments that we had to make on the loan that we had on the 113 (acres), with the fact that at that point in time money was still flowing in like crazy on the 252 (acres), I had no idea the market was going to turn and I could've never predicted it. So I made the decision to loan that $1.4 million to the 113."

"That loan is not documented at this time. It's just our word," Neth admitted to investor Greg Pender, a plaintiff from Arizona.

Pender angrily replied, "If there's no documentation of that loan, then we're left holding the bag."

"Don't you think you should've informed us that was happening?" Pender said, referring to a section of the articles of incorporation requiring a vote of the company members.

Pahrump resident Sue Alcorn said in a phone interview Monday she's paying $640 per month on her $25,000 investment in Stockton Jane LLC. Alcorn said she lost her job when the Pahrump office of Chicago Title closed last week and isn't able to collect unemployment under her contract.

Alcorn said as a Realtor, Neth did the worst thing someone in the real estate market could do, accusing him of embezzling the money.

"I received a prospectus which said my $25,000 was invested in an LLC called Stockton Jane LLC. There never ever was to this day an asset in Stockton Jane LLC, never a dollar, never two dollars," she said.

Another investor confronted Neth after his K-1 income tax form didn't disclose any income from the investment, Alcorn said. She said Neth put an initial $75,000 in good faith money required by the confession of judgment but nothing since.

Alcorn said she confronted Neth by conference call at the September shareholder's meeting when he confirmed for the first time, Stockton Jane LLC did not have title to the property.

"Myself and Eric Frye have title to the property. The reason that is, (property owner) Joe Ott, in taking the deal, would not carry the (promissory) note back in the name of an LLC. They would only carry it back in the name of the individuals who were buying it," Neth said.

Alcorn disputed that statement.

"When you're talking about a piece of property in the $5 million range most people do transfer it to an LLC. It's very unusual to transfer it to a person's name," Alcorn said.

Dr. Stephen Savran, a cardiologist who practices in Pahrump, wouldn't disclose the amount of his investment.

He recalled playing golf in Denver, Colo. when he found out the property was in the name of Neth and Frye and hooked his next three golf shots out of bounds.

"I was flabbergasted. I had called Henry on many, many occasions. Henry and I would see each other, and I'd called Henry on several occasions, and Henry told me things were going fine, things were being done," Savran said.

"Henry never even intimated to me that there was any relationship between the two properties, that there were any loans, that the loan was in his and Frye's name. This was brand new to me. I found about it last fall when the suit was filed," he said.

"I'm surprised. I've known Henry for a long time. It never occurred to me that he would set up a scheme like this. I'm surprised. He's a friend. I'm disappointed," Savran said.

Neth wouldn't say much in a Tuesday telephone interview in light of the lawsuit. But he said, "I'm working my tail off to see that the investors are paid back."

Baktari said the 14 plaintiffs will be first in line to recover any damages before the other shareholders who aren't listed in the suit, though Neth said, "I have absolutely nothing. My wife owns Provenza-Neth Properties."

"The reason that other people haven't joined the suit is, No. 1, they don't believe there's fraud and, No. 2, they believe they might be able to recoup their return on their investment, even with the market the way it is," Neth said.