Case 2:12-cv-05662-PA-CW Document 32

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KENNETH G. EADE (SBN 93774) keneade@gmail.com 6399 Wilshire Blvd., Suite 507 Los Angeles, CA 90048 Telephone: (323) 703-1594 Facsimile: (323) 704-3539 Defendant, IN PROPRIA PERSONA

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. GOLD STANDARD MINING CORP., et al., Defendants. Courtroom: Judge: 15 Hon. Percy Anderson U.S. District Court Judge Case No. CV 12-5662 PA (CWx) DEFENDANT KENNETH EADES ANSWER TO COMPLAINT

Defendant, KENNETH G. EADE, answering for himself individually to Plaintiffs Complaint, hereby admits, denies and alleges as follows: 1. Defendant hereby denies generally and specifically each and every

allegation contained within Paragraphs 1, 2, 3, 4, 6, 9, 10, 13, 17, 21, 26, 29, 31, 32, 33, 34, 35, 36, 37, 42, 44, 45, 46, 47, 48, 49, 50, 51, 52, 52, 54, 55, 56, 57, 58, 59, 61, 62, 63, 64, 65, 66, 67, 69, 71, 72, 75, 76, 77, 78, 79, 80, 81, 82, 83, 95, 96, 98, 99, 100, 119, 120, 121, of Plaintiffs Complaint. 2. Defendant lacks sufficient information for him to be able to answer the

allegations contained within Paragraphs 5, 22, 30, 39, 74, 90, 91, 92, 93, 117, and 122 of

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Plaintiffs Complaint and, basing his denial thereon, denies generally and specifically each and every allegation contained therein. 3. In answer to Paragraph 118, of Plaintiffs Complaint, Defendant

incorporates by reference all of his answers to Paragraphs 1 through 117 of the Complaint. FIRST AFFIRMATIVE DEFENSE 4. As a first and separate affirmative defense to each and every account of Plaintiffs Complaint, Defendant avers that the Court lacks subject matter jurisdiction. SECOND AFFIRMATIVE DEFENSE 5. As the second and separate affirmative defense to each and every count of the Plaintiffs Complaint, Defendant avers that his actions did not proximately cause any of the alleged securities law violations or damages that Plaintiff complains of. THIRD AFFIRMATIVE DEFENSE 6. As the third and separate affirmative defense to each and every count of the Plaintiffs Complaint, Defendant avers that the counts of Plaintiffs Complaint are barred by laches. FOURTH AFFIRMATIVE DEFENSE 7. As the fourth and separate affirmative defense to each and every count of the Plaintiffs Complaint, Defendant avers that that Plaintiff has failed to state in its Complaint sufficient facts to constitute a claim for which relief can be granted, within the parameters of Federal Rules of Civil Procedure Rule 9. FIFTH AFFIRMATIVE DEFENSE 8. As a fifth and separate affirmative defense to Plaintiffs first count of Plaintiffs Complaint for Securities Fraud, Defendant avers that count one does not state a federal securities law claim within the parameters of Rule 9 because it fails to state with particularity what fraudulent representations were made, who made them and why they were false or misleading.
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SIXTH AFFIRMATIVE DEFENSE As a sixth and separate affirmative defense to Plaintiffs first count of Plaintiffs Complaint for Securities Fraud, Defendant avers that Plaintiff has failed to state a claim under Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder in that Plaintiff has not alleged any specific and material representations in its complaint to stand up to Rule 9(b) of the Federal Rules of Civil Procedure. SEVENTH AFFIRMATIVE DEFENSE As a seventh and separate affirmative defense to each and every count of Plaintiffs Complaint, Defendant alleges that the Complaint fails to state a claim upon which relief can be granted in that it fails to sufficiently allege scienter. EIGHTH AFFIRMATIVE DEFENSE As an eighth and separate affirmative defense to each and every count alleged in the Plaintiffs Complaint, Defendant avers that he did not intentionally misrepresent or withhold material facts from the public in order to deceive, manipulate or defraud. NINTH AFFIRMATIVE DEFENSE As a ninth and separate affirmative defense to each and every count alleged in Plaintiffs Complaint, Defendant avers that Defendant did not recklessly misrepresent or withhold material facts from the public in order to deceive, manipulate or defraud. TENTH AFFIRMATIVE DEFENSE As a thirteenth and separate affirmative defense to each and every count alleged in Plaintiffs Complaint, Defendant avers that the Plaintiff is precluded from pursuing equitable relief against this answering Defendant, in that it conducted an unlawful and improper investigation, including gathering information and rumors while posing as alias fictitious investors on investor chat boards on the Internet, including investorshub.com.
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ELEVENTH AFFIRMATIVE DEFENSE As a fourteenth and separate affirmative defense to each and every count alleged in Plaintiffs Complaint, Defendant avers that this answering Defendant did not know about any alleged violation of securities laws by Gold Standard Mining or Pantelis Zachos. TWELFTH AFFIRMATIVE DEFENSE As a fifteenth and separate affirmative defense to each and every count alleged in Plaintiffs Complaint, Defendant avers that this answering Defendant did not knowingly provide substantial assistance to Gold Standard Mining Corp. or any employee thereof in achieving any alleged violation of the federal securities laws. THIRTEENTH AFFIRMATIVE DEFENSE As a thirteenth and separate affirmative defense to each and every count alleged in Plaintiffs Complaint, Defendant avers that Defendant was unaware that any conduct on his part constituted an alleged violation of securities laws. FOURTEENTH AFFIRMATIVE DEFENSE As a fourteenth and separate affirmative defense to each and every count alleged in Plaintiffs Complaint, Defendant avers that this answering Defendant did not act with extreme or severe recklessness necessary to constitute alleged violation of the federal securities laws. FIFTEENTH AFFIRMATIVE DEFENSE As a fifteenth and separate affirmative defense to each and every count alleged in Plaintiffs Complaint, Defendant avers that injunctive relief is not available to the Plaintiff in that Defendant has resigned as general counsel for Gold Standard Mining, and is no longer engaged in the practice of securities law, the preparation of SEC filings, or any other securities related endeavors that would make a reasonable likelihood that he would engage in transactions that violate the securities laws, and there is no reasonable likelihood that any future may occur.
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SIXTEENTH AFFIRMATIVE DEFENSE As a sixteenth and separate affirmative defense to each and every count of Plaintiffs Complaint, Defendant avers that the prospective injunctive relief that Plaintiff is requesting against this answering Defendant is unconstitutionally overbroad and is impermissible under Rule 65(d), as it merely seeks to compel Defendant to obey the law. SEVENTEENTH AFFIRMATIVE DEFENSE As a seventeenth and separate affirmative defense to each and every count of Plaintiffs Complaint, Defendant avers that registration of the transfer of Rosszoloto Co., Ltd. with the Russian authorities was not required under Russian law to effectuate the acquisition of Rosszoloto, LLC by Gold Standard Mining Corp. (Wyoming). EIGHTEENTH AFFIRMATIVE DEFENSE As an eighteenth and separate affirmative defense to each and every count alleged in Plaintiffs Complaint, Defendant avers that approval of the Russian government was not required under Russian law to effectuate the acquisition of Rosszoloto, LLC by Gold Standard Mining Corp. (Wyoming). NINETEENTH AFFIRMATIVE DEFENSE As a nineteenth and separate affirmative defense to each and every count

alleged in Plaintiffs Complaint, Defendant avers that no oral agreement existed between Rosszoloto, LLC, or Araik Khachatrian, on the one hand, and either Gold Standard Mining Corp. (Wyoming) or Gold Standard Mining Corp. (Nevada) on the other hand for Rosszoloto, Co., Ltd. or Araik Khachatrian to keep the profits from Rosszoloto Co., Ltds alluvial mining operation. TWENTIETH AFFIRMATIVE DEFENSE As a twentieth and separate affirmative defense to each and every count alleged in Plaintiffs Complaint, Defendant avers that the existence of any oral agreements or understandings between Araik Khachatrian, on the one hand, and either
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Gold Standard Mining Corp. (Wyoming) or Gold Standard Mining Corp. (Nevada) on the other hand, were foreclosed by integrated written agreements between the parties. TWENTY-FIRST AFFIRMATIVE DEFENSE 24. As a twenty-first and separate affirmative defense to each and every count alleged in Plaintiffs Complaint, Defendant avers that Rosszoloto Co., Ltd. is not a controlled person under Article 6(39) of the Russian Foreign Investment Law because, it had less than 50 tons of recoverable gold, as defined by Russian Federal Law 58 (Russian subsoil law), and the approval of the Russian government of the acquisition of Rosszoloto was not required under Russian law. TWENTY-SECOND AFFIRMATIVE DEFENSE 25. As a twenty-second and separate affirmative defense to each and every count of Plaintiffs Complaint, Defendant avers that this answering Defendant did not know and was not reckless in not knowing that financial statements of Gold Standard Mining Corp. were not prepared in accordance with GAAP. TWENTY-THIRD AFFIRMATIVE DEFENSE 26. As a twenty-third and separate affirmative defense to the second count alleged in Plaintiffs Complaint, Defendant avers that this answering Defendant did not provide substantial assistance in the preparation of Gold Standard Mining Corp.s financial statements, nor did he know or was he reckless in not knowing that the statements contained therein were false or misleading, because he lacked the expertise in accounting to make that determination. TWENTY-FOURTH AFFIRMATIVE DEFENSE 27. As a twenty-fourth and separate affirmative defense to each and every count alleged in Plaintiffs Complaint, Defendant avers that this answering Defendant did not know of any agreement or understanding agreement between Rosszoloto, LLC, or Araik Khachatrian, on the one hand, and either Gold Standard Mining Corp. (Wyoming) or

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Gold Standard Mining Corp. (Nevada) on the other hand that was not reduced to a written agreement between the parties.

Dated: October 22, 2012

Respectfully submitted, By /s/ Kenneth Eade KENNETH G. EADE, Attorney for Defendant

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PROOF OF SERVICE SEC v. GOLD STANDARD MINING, et al. - CV 12-5662 PA (CWx) STATE OF CALIFORNIA, COUNTY OF LOS ANGELES I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action, my business address is 6399 Wilshire Blvd., Suite 507, Los Angeles, California 90048. On October 23, 2012, I served the foregoing documents described as: DEFENDANT KENNETH EADES ANSWER TO COMPLAINT on the parties in this action by placing a true copy thereof enclosed in a sealed envelope addressed as follows: Leslie J. Hughes Securities and Exchange Commission 1801 California Street, Suite 1500 Denver, Colorado 80202 Tel: 303-844-1000 email: HughesLJ@sec.gov Molly M. White Securities and Exchange Commission 5670 Wilshire Blvd., 11th Floor Los Angeles, California 90036 Tel: 323-965-3998 email: WhiteM@sec.gov

BY CM/ECF: The document was electronically served on the parties to this action via the mandatory United States District Court of California CM/ECF system upon electronic filing of the above-described document.

Executed this 23rd day of October, 2012, at Los Angeles, California. I declare that I am employed in the office of a member of the bar of this Court at whose direction the service was made. /s/ Nichelle Guzmn NICHELLE GUZMAN