IP Amicus Brief HII EDVA Interpleader

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION

HII MISSION TECHNOLOGIES CORP.

Interpleader Plaintiff

v.

Civil Action No. 3:25-cv-00483-JAG

CYBERLUX CORPORATION, et al

Interpleader Defendants/Claimants

AMICUS CURIAE BRIEF OF JAMES CURTIN

INTRODUCTION

This amicus curiae brief is submitted by James Curtin, Plaintiff in Curtin v. Watts et al., No. 1:25-cv-00782 (M.D.N.C.), to provide factual clarity and contextual support relevant to the Court’s consideration of Cyberlux Corporation’s Motion to Dismiss the First Amended Interpleader Complaint (ECF No. 85). While Amicus is not yet a formal intervenor in this action, he is uniquely situated to assist the Court given his direct involvement in related matters, investigative reporting on the underlying contract and financial misconduct, and litigation against overlapping parties. The matters presented here bear directly on the questions of interpleader jurisdiction, the propriety of certain creditor claims, as well as the public’s interest in the integrity of taxpayer fund disbursements.

INTEREST OF AMICUS CURIAE

Amicus is the Plaintiff in a related civil action now pending in the Middle District of North Carolina (Curtin v. Watts et al., No. 1:25-cv-00782), which names as defendants Cyberlux Corporation, HII Mission Technologies Corp., and the City of Greensboro, among others. Amicus has alleged a campaign of retaliation by Cyberlux officers and affiliates, arising from his whistleblowing activity & public interest reporting on the award, administration, and financial irregularities surrounding the $78.8 million FMF-funded subcontract between HII and Cyberlux.

Amicus is also a public interest researcher, investigative author, and defense industry technologist whose reporting under the pseudonym “Jackson Holt” has detailed misconduct by Cyberlux and its representatives—including regulatory red flags, undisclosed liabilities, misuse of federal funds, and breach of procurement protocols. The issues raised in that reporting, and in Amicus’ ongoing litigation, directly intersect with the claims, defenses, and factual predicate of this interpleader. The retaliatory conduct alleged in the M.D.N.C. case stems directly from Amicus’ exposure of these FMF irregularities, tying the two proceedings together.

Because Amicus’ case names two parties also named here (Cyberlux and HII), and because the retaliation alleged in his lawsuit relates directly to the concealment and manipulation of FMF funds now in question before this honorable Court, Amicus has a strong interest in ensuring that the Court has access to all relevant information when evaluating whether Cyberlux’s Motion to Dismiss (ECF No. 85) is proper.

RELEVANT BACKGROUND

In August 2023, Cyberlux Corporation was awarded a $78.8 million subcontract by HII Mission Technologies under the U.S. Government’s Foreign Military Financing (FMF) program. The subcontract was for the manufacture and delivery of up to 2,000 small UAS (drone) systems destined for use in Ukraine.

Cyberlux was issued a $38.7 million advance payment in September 2023. Public records and subsequent legal declarations show that Cyberlux immediately wired millions of dollars to insiders and unrelated third parties, co-mingled advance funds with general operating accounts, and made no apparent effort to restrict use of taxpayer monies to project-specific expenses. Transfers included vehicle purchases, brokerage account deposits, offshore remittances, a former HII employee, and personal payments to executives and affiliates. A stop work order was issued in December 2023, and the prime contract was formally terminated for convenience by the U.S. Government in May 2024.

In addition, several of the agreements underlying current creditor claims were executed before the award of the subcontract, effectively pre-allocating anticipated FMF proceeds. Whether styled as contingent settlements, commission percentages, or broker entitlements, these agreements established a pre-emptive framework for diverting taxpayer funds away from contract performance. Upon information and belief, such provisions were reviewed, approved, or executed by Cyberlux CEO Mark Schmidt and the City Attorney of Greensboro North Carolina Chuck Watts, who also acted as Special Counsel to Cyberlux. Chuck Watts has recently, and abruptly, retired from his position as City Attorney after it was revealed he was negotiating with Cyberlux creditors (and Interpleader Defendants) to obtain waivers of liability related to the HII “settlement” using his government issued email address and office. Following his retirement – and under a cloud of allegations regarding a prolonged history of misuse of Greensboro City resources and employees to benefit Cyberlux’s legal efforts – two employees were terminated for actions they were “compelled” to take under his leadership, and the former Deputy City Attorney has resigned.

According to accounting figures prepared by Cyberlux CEO Mark Schmidt and provided to Fairwinds Technologies during negotiations regarding sums owed (3:25-cv-00483, Doc. 70-2 at 5), Cyberlux delivered only 392 of 2,000 contracted drones prior to termination of the subcontract, representing $14,954,400 in value against a $38.7 million advance payment. Under the governing principles of firm-fixed-price contracting, this left Cyberlux indebted to HII — and therefore the United States Government, as the ultimate source of FMF funds because FMF funds are drawn directly from U.S. taxpayer appropriations — in the amount of $22,776,605.40, the difference between advance funds received and product delivered. Approximately twelve months later, under the oversight of the Receiver, Cyberlux delivered the remaining 1,608 drones, which converted the outstanding advance payment indebtedness into a receivable asset. HII agreed to pay Cyberlux a “settlement” of $25,769,369.03 rather than clawback $22,776,605.40 of taxpayer funds — the Interpleader Funds now before this Court. The same figures also include an 8% commission calculation totalling $2,348,542, further demonstrating the existence of unlawful, or undisclosed, contingent-fee arrangements tied directly to FMF monies.

In effect, U.S. taxpayers have paid nearly $65 million to Cyberlux Corporation for drones that do not appear to have been, or will ever be, delivered to the intended customer, the Government of Ukraine.

Whilst the subcontract had been subject to a stop work order since December 2023, Cyberlux nevertheless encumbered the remaining receivable stream, already impaired and doubtfully collectible, for the entire $78.8 million contract when it assigned those receivables to Legalist in April 2024. This assignment occurred after performance had been halted and when Cyberlux had already spent substantially all of the $38.7 million advance payment. In May 2024, HII officially terminated the subcontract for convenience. Thus, by the time of Legalist’s security interest, the contract’s receivables were already impaired, and Cyberlux’s indebtedness to HII — and by extension the United States Government — remained unresolved.

Despite this termination, Cyberlux failed to disclose to shareholders the loss of the FMF contract in multiple subsequent OTC Markets financial reports, citing Non-Disclosure Agreements with HII. During this same period, the company’s executives and paid affiliates—including the City Attorney of Greensboro, North Carolina Chuck Watts (who was at the time also working as Special Counsel to Cyberlux and Mark Schmidt)—orchestrated online and direct campaigns to discredit, silence, and intimidate Amicus. These actions, detailed in Amicus’ litigation filings, illustrate the retaliatory environment created to suppress disclosure of misconduct.

Amicus’ lawsuit in M.D.N.C. alleges that this retaliation was carried out to silence public reporting that exposed these issues. The evidence forming the basis of that case includes communications with Cyberlux officers, unreleased financial documents, filings in parallel lawsuits, and promotional disclosures that are directly relevant to the interpleader.

Accordingly, Amicus has a direct interest in the administration of the funds at issue in this proceeding and a compelling public interest in supporting the Court’s assessment of the factual and legal landscape surrounding Cyberlux’s conduct.

IMPACT ON EXISTING CLAIMS AND BROADER JUDICIAL EFFICIENCY

The presence of multiple, potentially unlawful contingent and/or commission-based claims against the Cyberlux estate materially alters the landscape of the interpleader proceeding. These claims, including but not limited to, those filed by Fairwinds Technology, WeShield, and Montague Capital, raise serious concerns under DFARS 225.7303 and ITAR Part 129. Each seeks compensation from FMF funds distributed under a terminated federal subcontract and may involve payments in violation of U.S. procurement law.

Allowing these claims to proceed without scrutiny risks enabling the judicial enforcement of contracts that are void as a matter of public policy. Moreover, this Court may face motions for clawback or disgorgement if any funds are disbursed based on claims later found to be facially unlawful. The United States has an interest beyond tax collection here, namely ensuring that FMF funds are not misappropriated or distributed in violation of procurement law. That interest is directly implicated by the unresolved legal character of the commission-based claims currently pending. The Department of Justice has already appeared in this action to protect federal tax liens; its interest necessarily encompasses procurement compliance as well as collection.

Furthermore, there is substantial overlap between the interpleader and the related civil matter now pending in the Middle District of North Carolina (Curtin v. Watts et al., Case No. 1:25-cv-00782), which names Cyberlux, HII, and others as defendants. The allegations in that suit—arising from retaliatory conduct, securities misrepresentations, and institutional negligence—bear directly on the character and admissibility of certain claims being asserted in the interpleader. Coordination between these two matters may be essential to avoid inconsistent rulings and promote judicial efficiency.

The undersigned urges the Court to consider that a failure to assess the legitimacy of these claims at the threshold stage risks not only disbursement of taxpayer funds to impermissible recipients, but also irreparable harm to judicial integrity in matters touching foreign military financing and national procurement oversight.

THE NEED FOR INTERPLEADER JURISDICTION IS STRENGTHENED, NOT WEAKENED, BY EVIDENCE OF FRAUDULENT CLAIMS

Cyberlux Corporation argues that the interpleader should be dismissed because HII allegedly faces no “real” or “reasonable” fear of multiple liability. This argument is not only unsupported by the record, but contradicted by the nature of the claims already filed and the regulatory context in which they have arisen. The presence of fraudulent, unlawful, or otherwise noncompliant claims to the same fund is not a reason to dismiss the interpleader; it is a reason to maintain it.

Under Rule 22 of the Federal Rules of Civil Procedure and 28 U.S.C. § 1335, an interpleader is appropriate where the stakeholder reasonably fears exposure to multiple liabilities arising from competing claims to the same fund. That is precisely the circumstance presented here. The $25.7 million fund in question is the residue of a larger $78.8 million FMF-funded subcontract awarded by HII to Cyberlux. Since that time, multiple parties have surfaced asserting entitlement to shares of the fund based on promotional contracts, sourcing agreements, and contingency-based compensation structures.

As outlined in this brief and in other public filings, these claims include:

Montague Capital Partners: asserting 5% commission (~$3.9M) for brokering the FMF contract;

Fairwinds Technology: asserting 8% commission for the first 1,000 drones shipped;

WeShield (Assure Global LLC): asserting $2.5M commission for “sourcing and winning” the contract.

These claims appear to violate DFARS 225.7303 (contingent fees), FMF regulations (requiring prior DSCA approval and prohibition of commissions paid with U.S. taxpayer funds), and ITAR Part 129 (unlicensed brokering). None of these claimants appear to have disclosed their arrangements to the U.S. Government, the Department of State, or to HII. At least one—Montague—has admitted in sworn filings that he acted as a “broker” on behalf of Cyberlux without being registered with DDTC.

The result is a landscape in which multiple entities are claiming significant portions of the FMF-funded corpus, all while operating outside of the regulatory structure that governs foreign military financing and U.S. defense contracting. The legitimacy of these claims cannot be resolved by HII, nor should HII be asked to adjudicate them in the absence of judicial supervision.

The very allegations of systemic fraud, unauthorized contingent fees, and failure to disclose are what transform this from a simple breach-of-contract dispute into a textbook case for interpleader jurisdiction. Without court oversight, HII faces a real and material risk of conflicting judgments, improper payouts, or future liability under U.S. law. The Court’s intervention via interpleader is not merely justified — it is essential to ensure compliance with governing law and to prevent further disbursement of taxpayer funds to ineligible or unlawful parties.

Accordingly, the presence of fraudulent or noncompliant claims strengthens the case for maintaining the interpleader and directly undermines Cyberlux’s argument for dismissal.

THE BROADER PUBLIC INTEREST IN OVERSIGHT OF FMF FUNDS AND DEFENSE PROCUREMENT INTEGRITY

This case arises against the backdrop of increasing scrutiny into the misuse of Foreign Military Financing (FMF) funds, taxpayer accountability, and systemic gaps in defense procurement enforcement. The integrity of U.S. foreign assistance programs—particularly those involving lethal aid, drone technology, and international arms transfers—is of urgent national and global concern. Public confidence in the proper administration of FMF funds depends on transparency, compliance, and credible oversight.

Here, multiple third parties have presented claims tied to commission-based or contingent-fee arrangements that appear inconsistent with both Department of Defense regulations (DFARS 225.7303) and export control laws (22 C.F.R. Part 129). These same parties also face unresolved allegations concerning broker registration, non-disclosure of financial interest, and improper payment mechanisms. The interpleader process before this Court offers the first centralized forum in which such arrangements may be examined under judicial supervision.

The undersigned Amicus submits that the interpleader is no longer merely about priority of payment among commercial creditors. It implicates the larger question of whether FMF funds were disbursed and handled in accordance with U.S. law, and whether contractors and their affiliates maintained fidelity to the statutes and contractual obligations governing such awards. The United States has an interest in ensuring that FMF funds are not misappropriated, which extends well beyond tax collection concerns, and this Court is well positioned to bring those interests into consideration.

To permit this Court to adjudicate those issues without considering the systemic implications would be to narrow the lens at the precise moment when broader oversight is most needed. The Court’s jurisdiction under interpleader not only protects the stakeholder (HII), but serves the public’s interest in ensuring that awards financed by public funds are not subject to fraud, regulatory evasion, or litigation tactics by unlicensed or undisclosed actors.

Finally, the implications of this case extend beyond these litigants. Every future FMF contract risks similar exposure unless mechanisms exist to detect and prevent the abuses alleged here. This Court is well-positioned to help define those boundaries, reaffirm compliance obligations, and ensure that the interpleader mechanism functions as a guardian of both judicial economy and public integrity.

For the foregoing reasons, Amicus respectfully urges this Court to:

Deny Cyberlux Corporation’s Motion to Dismiss (ECF No. 86);

Preserve the interpleader mechanism as a necessary tool for managing the legal and regulatory risks surrounding the FMF disbursements at issue;

And consider the broader public interest in ensuring transparency, accountability, and legal compliance in the administration of taxpayer-funded foreign military aid.

Respectfully submitted,

By: _____________________

James Curtin - Pro Se

James Curtin, Pro Se

Carotank Road Holdings Inc

Second Floor

Washington, D.C. 20005

jim@carotankroad.com

CERTIFICATION

_________________________

James Curtin

_________________________

Date