Plaintiffs Atlantic Wave Holdings, LLC and Secure Community, LLC's Further Supplemental Update re: Defendants' Motion to Vacate
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observationobservation
7November2024 SDCalECF32 is the dated advocacy record.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
David M. Keithly, State Bar No. 292101
dkeithly@mortensontaggart.com
Sara K. Ross, State Bar No. 346153
sross@mortensontaggart.com
MORTENSON TAGGART ADAMS LLP
300 Spectrum Center Drive, Suite 1200
Irvine, California 92618
Telephone: (949) 774-2224
Facsimile: (949) 774-2545
Attorneys for Plaintiffs
ATLANTIC WAVE HOLDINGS, LLC
and SECURE COMMUNITY, LLC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS, LLC,
a Virginia limited liability company and
SECURE COMMUNITY, LLC, a
Virginia limited liability company,
Plaintiffs,
vs.
CYBERLUX CORPORATION, a
Nevada Corporation; MARK D.
SCHMIDT, an individual,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Declaration of
David M. Keithly, Declaration of
William Welter and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.939 Page 1
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observationobservation
Referenced HII24October nonjoinder answer is a key source dependency.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Plaintiffs Atlantic Wave Holdings, LLC and Secure Community, LLC
(collectively, “Plaintiffs”) submit this supplemental update to highlight new and
critical developments underscoring the urgency for immediate judicial intervention.
Plaintiffs domesticated their Virginia judgment in California in February 2024.
Plaintiffs filed this action in San Diego because Defendants' only remaining
significant asset is Datron, a company located in Vista, California, making local court
involvement essential. Shortly after Plaintiffs domesticated their judgment, on March
11, 2024, Defendants removed this action to federal court and filed a motion to vacate
and stay the judgment. During this period, Plaintiffs learned that Defendants received
over $38 million in early September 2023 from a U.S. Government contract, which
should have been used to satisfy Defendants’ Judgment debt. However, Defendants
falsely stated in October that there had been "no drone sales," contradicting evidence
of their revenue, and refused to pay.
Plaintiffs also recently learned that in April 2024, amidst ongoing litigation,
Defendants assigned all revenue from the drone contract to Legalist SVP III—a
factoring company—effectively selling the drone contract without informing
Plaintiffs, stockholders, or the Court. This covert action deprived Plaintiffs of critical
revenue that should have been used to satisfy the Judgment—and violated the
Settlement Agreement, which mandates disclosure of all material information related
to drone sales and status. Despite their financial obligations, Defendants have engaged
in a troubling pattern of deceit and strategic delay aimed at evading their obligations
and dissipating assets intended to satisfy the Judgment.
On August 9, 2024, the same Virginia court that issued the Judgment released
garnished funds to Plaintiffs totaling approximately $183,798.34 from PNC Bank and
$4,862.86 from Towne Bank. This release reaffirms the validity and immediate
enforceability of the June 28, 2023 Amended Final Order and Judgment. Despite this
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.940 Page 2
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
raises serious concerns about the veracity of Defendants’ disclosures and the
management of these funds.
2. Defendants’ Complaints for Injunctive and Declaratory Relief
Since filing complaints for immediate injunctive relief and declaratory relief in
Virginia on July 8, 2024, Defendants have not meaningfully engaged in legal
proceedings in Virginia. (Zablah Decl., ¶¶ 13-17; Dkt. No. 31 at ¶¶ 2-13.) Despite
Defendants' assertions elsewhere, no stay has been issued—or even considered—in
the Virginia proceedings. (Zablah Decl. ¶¶ 4-5; Keithly Decl., ¶¶ 2-3; Welter Decl.,
¶¶ 10-11).
Defendants have not agreed to reasonable hearing dates or complied with
discovery obligations, including responding to Requests for Admissions (RFAs)
served on September 6, 2024, which were due by September 27, 2024. (Zablah Decl.,
¶ 9, Ex. C; ¶¶ 13-17). Under Rule 4:11 of the Rules of the Supreme Court of Virginia,
RFAs not answered within 21 days are deemed admitted. Cyberlux's failure to
respond has led to several critical admissions, including:
Cyberlux shipped approximately $15,000,000 worth of drones prior to
December 31, 2023 (Zablah Decl., ¶ 9, Ex. C at RFA No. 25), in breach of the
requirement to disclose such sales and provide $5,000 per drone sold as
stipulated in the Settlement Agreement (Dkt No. 24-1 (Settlement Agreement)
at §§ 4.b, 4.c).
Cyberlux failed to provide requested documentation relevant to drone sales
(Zablah Decl., ¶ 9, Ex. C at RFA No. 28), violating their obligation to provide
updates and documentation as required (Dkt. No. 24-1 at § 8).
Cyberlux provided inaccurate financials to induce settlement (Zablah Decl., ¶
9, Ex. C at RFA No. 32), breaching the representation that financial statements
are materially true and accurate. (Dkt. No. 24-1 at § 10).
Cyberlux attempted to sell or merge its business or assets in the last 24 months
(Zablah Decl., ¶ 9, Ex. C at RFA No. 24), contrary to its obligations under the
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.946 Page 8
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claimallegation
Atlantic Wave and Secure Community’s7November2024 further supplemental update, SDCalECF32 in3:24-cv-00482-RBM-VET, asks denial of defendants
Atlantic Wave and Secure Community’s7November2024 further supplemental update, SDCalECF32 in3:24-cv-00482-RBM-VET, asks denial of defendants’ motion to vacate and lifting of the enforcement stay. Keithly signs; declarations by Keithly, Welter and Zablah are identified as concurrent filings but are not contained in this12-page brief.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
David M. Keithly, State Bar No. 292101
dkeithly@mortensontaggart.com
Sara K. Ross, State Bar No. 346153
sross@mortensontaggart.com
MORTENSON TAGGART ADAMS LLP
300 Spectrum Center Drive, Suite 1200
Irvine, California 92618
Telephone: (949) 774-2224
Facsimile: (949) 774-2545
Attorneys for Plaintiffs
ATLANTIC WAVE HOLDINGS, LLC
and SECURE COMMUNITY, LLC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS, LLC,
a Virginia limited liability company and
SECURE COMMUNITY, LLC, a
Virginia limited liability company,
Plaintiffs,
vs.
CYBERLUX CORPORATION, a
Nevada Corporation; MARK D.
SCHMIDT, an individual,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Declaration of
David M. Keithly, Declaration of
William Welter and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.939 Page 1
of 12
claimallegation
The brief repeats a claimed pattern of concealment, asset dissipation and procedural delay to press for immediate enforcement. Its conclusio
The brief repeats a claimed pattern of concealment, asset dissipation and procedural delay to press for immediate enforcement. Its conclusion requests denial of vacatur and lifting theCalifornia stay; it does not show that the court granted either request.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
Relying on this misrepresentation, the Texas court temporarily stayed
enforcement of the Judgment for 30 days to provide Defendants the opportunity to
present evidence of the supposed stay, although it did not halt discovery. (Keithly
Decl. ¶ 3, Ex. A; Welter Decl., ¶ 11.) This maneuver exemplifies Defendants' broader
strategy of leveraging the Virginia litigation to obstruct and delay Plaintiffs' legitimate
collection efforts while sowing jurisdictional confusion across the courts involved.
(Keithly Decl., ¶ 4.)
By exploiting procedural ambiguities and creating jurisdictional confusion,
Defendants aim to prolong the enforcement process and dissipate assets that should
rightfully satisfy the Judgment debt. This misuse of the legal system underscores the
urgent need for court intervention to prevent further obstruction and ensure that
Plaintiffs can secure the assets needed to satisfy the Judgment.
Plaintiffs urge the Court to recognize the severity of Defendants’ conduct and
deny the Motion to Vacate the domesticated Judgment. Moreover, lifting the stay on
enforcement actions is essential to prevent further asset dissipation and to uphold the
integrity of the judicial process, allowing Plaintiffs to proceed with their rightful
claims without further hindrance.
IV. BROADER IMPLICATIONS OF DEFENDANTS’ ACTIONS AND
THE NEED FOR JUDICIAL INTERVENTION
The actions taken by Defendants extend beyond mere procedural delays; they
represent a strategic pattern designed to undermine the enforcement of a valid
judgment and to obfuscate their financial obligations. This pattern is evidenced by a
series of calculated maneuvers that have systematically impeded Plaintiffs' efforts to
collect the amounts owed under the Amended Final Order and Judgment. Defendants’
decision to assign all revenue from the drone contract to Legalist SVP III, a factoring
company, effectively diverts potential funds from Plaintiffs, undermining the
enforcement of the judgment (Zablah Decl., ¶ 11, Ex. D at ¶¶ 12-14; Welter Decl., ¶¶
2, 5). This transaction, which was neither disclosed to Plaintiffs nor the court,
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.948 Page 10
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claimallegation
Plaintiffs say they domesticated the28June2023 Virginia judgment inCalifornia inFebruary2024 because Datron inVista was defendants’ only rem
Plaintiffs say they domesticated the28June2023 Virginia judgment inCalifornia inFebruary2024 because Datron inVista was defendants’ only remaining significant asset, followed by11March removal and10April motion to vacate. They recount June writ/quash proceedings, a25June order stopping execution, and denial of aJuly bond request, while acknowledging California enforcement/discovery remained stayed. These procedural accounts require the cited docket records.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Plaintiffs Atlantic Wave Holdings, LLC and Secure Community, LLC
(collectively, “Plaintiffs”) submit this supplemental update to highlight new and
critical developments underscoring the urgency for immediate judicial intervention.
Plaintiffs domesticated their Virginia judgment in California in February 2024.
Plaintiffs filed this action in San Diego because Defendants' only remaining
significant asset is Datron, a company located in Vista, California, making local court
involvement essential. Shortly after Plaintiffs domesticated their judgment, on March
11, 2024, Defendants removed this action to federal court and filed a motion to vacate
and stay the judgment. During this period, Plaintiffs learned that Defendants received
over $38 million in early September 2023 from a U.S. Government contract, which
should have been used to satisfy Defendants’ Judgment debt. However, Defendants
falsely stated in October that there had been "no drone sales," contradicting evidence
of their revenue, and refused to pay.
Plaintiffs also recently learned that in April 2024, amidst ongoing litigation,
Defendants assigned all revenue from the drone contract to Legalist SVP III—a
factoring company—effectively selling the drone contract without informing
Plaintiffs, stockholders, or the Court. This covert action deprived Plaintiffs of critical
revenue that should have been used to satisfy the Judgment—and violated the
Settlement Agreement, which mandates disclosure of all material information related
to drone sales and status. Despite their financial obligations, Defendants have engaged
in a troubling pattern of deceit and strategic delay aimed at evading their obligations
and dissipating assets intended to satisfy the Judgment.
On August 9, 2024, the same Virginia court that issued the Judgment released
garnished funds to Plaintiffs totaling approximately $183,798.34 from PNC Bank and
$4,862.86 from Towne Bank. This release reaffirms the validity and immediate
enforceability of the June 28, 2023 Amended Final Order and Judgment. Despite this
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.940 Page 2
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claimallegation
Plaintiffs allege Cyberlux received over$38million from HII on8September2023 connected to drone sales, yet counsel said on10October2023 that
Plaintiffs allege Cyberlux received over$38million from HII on8September2023 connected to drone sales, yet counsel said on10October2023 that no drones had been sold. They contend the payment should have satisfied the judgment. The wire and email are cited Welter exhibits, not included here; receipt, sales recognition and contractual payment trigger are not interchangeable without those records.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Plaintiffs Atlantic Wave Holdings, LLC and Secure Community, LLC
(collectively, “Plaintiffs”) submit this supplemental update to highlight new and
critical developments underscoring the urgency for immediate judicial intervention.
Plaintiffs domesticated their Virginia judgment in California in February 2024.
Plaintiffs filed this action in San Diego because Defendants' only remaining
significant asset is Datron, a company located in Vista, California, making local court
involvement essential. Shortly after Plaintiffs domesticated their judgment, on March
11, 2024, Defendants removed this action to federal court and filed a motion to vacate
and stay the judgment. During this period, Plaintiffs learned that Defendants received
over $38 million in early September 2023 from a U.S. Government contract, which
should have been used to satisfy Defendants’ Judgment debt. However, Defendants
falsely stated in October that there had been "no drone sales," contradicting evidence
of their revenue, and refused to pay.
Plaintiffs also recently learned that in April 2024, amidst ongoing litigation,
Defendants assigned all revenue from the drone contract to Legalist SVP III—a
factoring company—effectively selling the drone contract without informing
Plaintiffs, stockholders, or the Court. This covert action deprived Plaintiffs of critical
revenue that should have been used to satisfy the Judgment—and violated the
Settlement Agreement, which mandates disclosure of all material information related
to drone sales and status. Despite their financial obligations, Defendants have engaged
in a troubling pattern of deceit and strategic delay aimed at evading their obligations
and dissipating assets intended to satisfy the Judgment.
On August 9, 2024, the same Virginia court that issued the Judgment released
garnished funds to Plaintiffs totaling approximately $183,798.34 from PNC Bank and
$4,862.86 from Towne Bank. This release reaffirms the validity and immediate
enforceability of the June 28, 2023 Amended Final Order and Judgment. Despite this
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.940 Page 2
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claimallegation
Plaintiffs characterise theApril2024 Legalist assignment and12July payment direction as undisclosed diversion, effectively selling the drone
Plaintiffs characterise theApril2024 Legalist assignment and12July payment direction as undisclosed diversion, effectively selling the drone contract and breaching settlement disclosure duties. They cite HII’s24October answer and Welter/Zablah materials, refer to Legalist as SVP III, and call it a factoring company. That characterisation and alleged secrecy remain plaintiffs’ positions, not a transaction-form or priority finding.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Plaintiffs Atlantic Wave Holdings, LLC and Secure Community, LLC
(collectively, “Plaintiffs”) submit this supplemental update to highlight new and
critical developments underscoring the urgency for immediate judicial intervention.
Plaintiffs domesticated their Virginia judgment in California in February 2024.
Plaintiffs filed this action in San Diego because Defendants' only remaining
significant asset is Datron, a company located in Vista, California, making local court
involvement essential. Shortly after Plaintiffs domesticated their judgment, on March
11, 2024, Defendants removed this action to federal court and filed a motion to vacate
and stay the judgment. During this period, Plaintiffs learned that Defendants received
over $38 million in early September 2023 from a U.S. Government contract, which
should have been used to satisfy Defendants’ Judgment debt. However, Defendants
falsely stated in October that there had been "no drone sales," contradicting evidence
of their revenue, and refused to pay.
Plaintiffs also recently learned that in April 2024, amidst ongoing litigation,
Defendants assigned all revenue from the drone contract to Legalist SVP III—a
factoring company—effectively selling the drone contract without informing
Plaintiffs, stockholders, or the Court. This covert action deprived Plaintiffs of critical
revenue that should have been used to satisfy the Judgment—and violated the
Settlement Agreement, which mandates disclosure of all material information related
to drone sales and status. Despite their financial obligations, Defendants have engaged
in a troubling pattern of deceit and strategic delay aimed at evading their obligations
and dissipating assets intended to satisfy the Judgment.
On August 9, 2024, the same Virginia court that issued the Judgment released
garnished funds to Plaintiffs totaling approximately $183,798.34 from PNC Bank and
$4,862.86 from Towne Bank. This release reaffirms the validity and immediate
enforceability of the June 28, 2023 Amended Final Order and Judgment. Despite this
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.940 Page 2
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claimallegation
Plaintiffs say HII’s answer revealedMay2024 termination of the subcontract and allege defendants concealed termination while repeatedly prom
Plaintiffs say HII’s answer revealedMay2024 termination of the subcontract and allege defendants concealed termination while repeatedly promising imminent contract payment. They argue cancellation undermines recovery and makes Datron assets important. The brief does not quantify any termination settlement or establish that all potential post-termination receivables vanished.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
judicial endorsement, Defendants have used litigation in Virginia and misleading
representations in Texas to delay enforcement. Specifically, Defendants’ counsel
falsely claimed that a stay of enforcement was entered in Virginia, misleading the
Texas court into further delaying enforcement of the Judgment. This mirrors
Defendants' arguments in favor of their Motion to Vacate, suggesting that Virginia
actions need resolution before enforcement can proceed. In fact, the Virginia actions
do not question the Judgment's validity or enforceability and do not bar immediate
enforcement of the Judgment. Adding to these concerns, Defendants' counsel in the
Virginia litigation has stated unavailability for hearings until April 2025, despite
seeking urgent injunctive relief.
Further complicating matters, Plaintiffs recently discovered that Defendants
failed to disclose the termination of their crucial U.S. Government drone contract in
May 2024—a contract repeatedly cited as a primary source of funds to satisfy the
Judgment. The secret assignment of future payments from this contract to Legalist
SVP III further shields these assets from Plaintiffs.
This persistent pattern of non-compliance, misrepresentation, and strategic delay
underscores the urgent need for the Court to deny Defendants’ Motion to Vacate and
lift the stay on enforcement actions. Immediate Court intervention is essential not only
to prevent further asset dissipation but also to ensure that Defendants do not continue
to misuse the judicial process to delay enforcement of the Judgment debt.
II. BACKGROUND AND TIMELINE OF EVENTS
Plaintiffs obtained the final Judgment in Virginia on June 28, 2023, which was
subsequently domesticated in California to facilitate enforcement against Defendants’
assets in San Diego (Docket (“Dkt.”) No. 1-5). On March 11, 2024, Defendants
removed the action to federal court (Dkt. No. 1). Shortly thereafter, on April 5, 2024,
Cyberlux assigned all revenue from its drone contract to a factoring company, Legalist
SVP III, effectively diverting funds that could have satisfied the judgment
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.941 Page 3
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claimallegation
Plaintiffs report9August2024 release of approximately$183,798.34 fromPNCBank and$4,862.86 fromTowneBank under Virginia garnishments. They in
Plaintiffs report9August2024 release of approximately$183,798.34 fromPNCBank and$4,862.86 fromTowneBank under Virginia garnishments. They infer continuing validity/enforceability of the judgment from those releases. The underlying release orders are cited separately, and this inference does not automatically resolve the separate California vacatur/stay motion.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Plaintiffs Atlantic Wave Holdings, LLC and Secure Community, LLC
(collectively, “Plaintiffs”) submit this supplemental update to highlight new and
critical developments underscoring the urgency for immediate judicial intervention.
Plaintiffs domesticated their Virginia judgment in California in February 2024.
Plaintiffs filed this action in San Diego because Defendants' only remaining
significant asset is Datron, a company located in Vista, California, making local court
involvement essential. Shortly after Plaintiffs domesticated their judgment, on March
11, 2024, Defendants removed this action to federal court and filed a motion to vacate
and stay the judgment. During this period, Plaintiffs learned that Defendants received
over $38 million in early September 2023 from a U.S. Government contract, which
should have been used to satisfy Defendants’ Judgment debt. However, Defendants
falsely stated in October that there had been "no drone sales," contradicting evidence
of their revenue, and refused to pay.
Plaintiffs also recently learned that in April 2024, amidst ongoing litigation,
Defendants assigned all revenue from the drone contract to Legalist SVP III—a
factoring company—effectively selling the drone contract without informing
Plaintiffs, stockholders, or the Court. This covert action deprived Plaintiffs of critical
revenue that should have been used to satisfy the Judgment—and violated the
Settlement Agreement, which mandates disclosure of all material information related
to drone sales and status. Despite their financial obligations, Defendants have engaged
in a troubling pattern of deceit and strategic delay aimed at evading their obligations
and dissipating assets intended to satisfy the Judgment.
On August 9, 2024, the same Virginia court that issued the Judgment released
garnished funds to Plaintiffs totaling approximately $183,798.34 from PNC Bank and
$4,862.86 from Towne Bank. This release reaffirms the validity and immediate
enforceability of the June 28, 2023 Amended Final Order and Judgment. Despite this
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.940 Page 2
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claimallegation
Plaintiffs allege defendants did not answer RFAs served6September2024 by27September and invoke VirginiaRule4:11 to treat them as admitted. T
Plaintiffs allege defendants did not answer RFAs served6September2024 by27September and invoke VirginiaRule4:11 to treat them as admitted. They list asserted admissions: approximately$15million drones shipped by31December2023 (RFA25), failure to provide sales documents (28), inaccurate financials inducing settlement (32), and sale/merger attempts in24months (24). The actual RFAs, service, responses and any withdrawal/admission order are not included.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
raises serious concerns about the veracity of Defendants’ disclosures and the
management of these funds.
2. Defendants’ Complaints for Injunctive and Declaratory Relief
Since filing complaints for immediate injunctive relief and declaratory relief in
Virginia on July 8, 2024, Defendants have not meaningfully engaged in legal
proceedings in Virginia. (Zablah Decl., ¶¶ 13-17; Dkt. No. 31 at ¶¶ 2-13.) Despite
Defendants' assertions elsewhere, no stay has been issued—or even considered—in
the Virginia proceedings. (Zablah Decl. ¶¶ 4-5; Keithly Decl., ¶¶ 2-3; Welter Decl.,
¶¶ 10-11).
Defendants have not agreed to reasonable hearing dates or complied with
discovery obligations, including responding to Requests for Admissions (RFAs)
served on September 6, 2024, which were due by September 27, 2024. (Zablah Decl.,
¶ 9, Ex. C; ¶¶ 13-17). Under Rule 4:11 of the Rules of the Supreme Court of Virginia,
RFAs not answered within 21 days are deemed admitted. Cyberlux's failure to
respond has led to several critical admissions, including:
Cyberlux shipped approximately $15,000,000 worth of drones prior to
December 31, 2023 (Zablah Decl., ¶ 9, Ex. C at RFA No. 25), in breach of the
requirement to disclose such sales and provide $5,000 per drone sold as
stipulated in the Settlement Agreement (Dkt No. 24-1 (Settlement Agreement)
at §§ 4.b, 4.c).
Cyberlux failed to provide requested documentation relevant to drone sales
(Zablah Decl., ¶ 9, Ex. C at RFA No. 28), violating their obligation to provide
updates and documentation as required (Dkt. No. 24-1 at § 8).
Cyberlux provided inaccurate financials to induce settlement (Zablah Decl., ¶
9, Ex. C at RFA No. 32), breaching the representation that financial statements
are materially true and accurate. (Dkt. No. 24-1 at § 10).
Cyberlux attempted to sell or merge its business or assets in the last 24 months
(Zablah Decl., ¶ 9, Ex. C at RFA No. 24), contrary to its obligations under the
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.946 Page 8
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claimallegation
Plaintiffs map those claimed admissions to settlement$5,000-per-drone and disclosure provisions (§§4.b,4.c,7,8,10), call them breaches, and
Plaintiffs map those claimed admissions to settlement$5,000-per-drone and disclosure provisions (§§4.b,4.c,7,8,10), call them breaches, and allege defendants’July Virginia suits and scheduling delays did not challenge judgment validity. These legal and intent conclusions remain creditor advocacy.
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raises serious concerns about the veracity of Defendants’ disclosures and the
management of these funds.
2. Defendants’ Complaints for Injunctive and Declaratory Relief
Since filing complaints for immediate injunctive relief and declaratory relief in
Virginia on July 8, 2024, Defendants have not meaningfully engaged in legal
proceedings in Virginia. (Zablah Decl., ¶¶ 13-17; Dkt. No. 31 at ¶¶ 2-13.) Despite
Defendants' assertions elsewhere, no stay has been issued—or even considered—in
the Virginia proceedings. (Zablah Decl. ¶¶ 4-5; Keithly Decl., ¶¶ 2-3; Welter Decl.,
¶¶ 10-11).
Defendants have not agreed to reasonable hearing dates or complied with
discovery obligations, including responding to Requests for Admissions (RFAs)
served on September 6, 2024, which were due by September 27, 2024. (Zablah Decl.,
¶ 9, Ex. C; ¶¶ 13-17). Under Rule 4:11 of the Rules of the Supreme Court of Virginia,
RFAs not answered within 21 days are deemed admitted. Cyberlux's failure to
respond has led to several critical admissions, including:
Cyberlux shipped approximately $15,000,000 worth of drones prior to
December 31, 2023 (Zablah Decl., ¶ 9, Ex. C at RFA No. 25), in breach of the
requirement to disclose such sales and provide $5,000 per drone sold as
stipulated in the Settlement Agreement (Dkt No. 24-1 (Settlement Agreement)
at §§ 4.b, 4.c).
Cyberlux failed to provide requested documentation relevant to drone sales
(Zablah Decl., ¶ 9, Ex. C at RFA No. 28), violating their obligation to provide
updates and documentation as required (Dkt. No. 24-1 at § 8).
Cyberlux provided inaccurate financials to induce settlement (Zablah Decl., ¶
9, Ex. C at RFA No. 32), breaching the representation that financial statements
are materially true and accurate. (Dkt. No. 24-1 at § 10).
Cyberlux attempted to sell or merge its business or assets in the last 24 months
(Zablah Decl., ¶ 9, Ex. C at RFA No. 24), contrary to its obligations under the
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.946 Page 8
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claimallegation
Plaintiffs allege defence counsel falsely told theTexas court on28October2024 that Virginia had stayed execution, asserting no Virginia stay
Plaintiffs allege defence counsel falsely told theTexas court on28October2024 that Virginia had stayed execution, asserting no Virginia stay existed or had been considered. They say Texas then paused enforcement30days for evidence while leaving discovery open. This relies on concurrent declarations and a referencedTexas order; the transcript, order and Virginia docket are not in this brief.
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judicial endorsement, Defendants have used litigation in Virginia and misleading
representations in Texas to delay enforcement. Specifically, Defendants’ counsel
falsely claimed that a stay of enforcement was entered in Virginia, misleading the
Texas court into further delaying enforcement of the Judgment. This mirrors
Defendants' arguments in favor of their Motion to Vacate, suggesting that Virginia
actions need resolution before enforcement can proceed. In fact, the Virginia actions
do not question the Judgment's validity or enforceability and do not bar immediate
enforcement of the Judgment. Adding to these concerns, Defendants' counsel in the
Virginia litigation has stated unavailability for hearings until April 2025, despite
seeking urgent injunctive relief.
Further complicating matters, Plaintiffs recently discovered that Defendants
failed to disclose the termination of their crucial U.S. Government drone contract in
May 2024—a contract repeatedly cited as a primary source of funds to satisfy the
Judgment. The secret assignment of future payments from this contract to Legalist
SVP III further shields these assets from Plaintiffs.
This persistent pattern of non-compliance, misrepresentation, and strategic delay
underscores the urgent need for the Court to deny Defendants’ Motion to Vacate and
lift the stay on enforcement actions. Immediate Court intervention is essential not only
to prevent further asset dissipation but also to ensure that Defendants do not continue
to misuse the judicial process to delay enforcement of the Judgment debt.
II. BACKGROUND AND TIMELINE OF EVENTS
Plaintiffs obtained the final Judgment in Virginia on June 28, 2023, which was
subsequently domesticated in California to facilitate enforcement against Defendants’
assets in San Diego (Docket (“Dkt.”) No. 1-5). On March 11, 2024, Defendants
removed the action to federal court (Dkt. No. 1). Shortly thereafter, on April 5, 2024,
Cyberlux assigned all revenue from its drone contract to a factoring company, Legalist
SVP III, effectively diverting funds that could have satisfied the judgment
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entityobservation
ATLANTIC WAVE HOLDINGS, LLC
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
David M. Keithly, State Bar No. 292101
dkeithly@mortensontaggart.com
Sara K. Ross, State Bar No. 346153
sross@mortensontaggart.com
MORTENSON TAGGART ADAMS LLP
300 Spectrum Center Drive, Suite 1200
Irvine, California 92618
Telephone: (949) 774-2224
Facsimile: (949) 774-2545
Attorneys for Plaintiffs
ATLANTIC WAVE HOLDINGS, LLC
and SECURE COMMUNITY, LLC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS, LLC,
a Virginia limited liability company and
SECURE COMMUNITY, LLC, a
Virginia limited liability company,
Plaintiffs,
vs.
CYBERLUX CORPORATION, a
Nevada Corporation; MARK D.
SCHMIDT, an individual,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Declaration of
David M. Keithly, Declaration of
William Welter and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.939 Page 1
of 12
entityobservation
SECURE COMMUNITY, LLC
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
David M. Keithly, State Bar No. 292101
dkeithly@mortensontaggart.com
Sara K. Ross, State Bar No. 346153
sross@mortensontaggart.com
MORTENSON TAGGART ADAMS LLP
300 Spectrum Center Drive, Suite 1200
Irvine, California 92618
Telephone: (949) 774-2224
Facsimile: (949) 774-2545
Attorneys for Plaintiffs
ATLANTIC WAVE HOLDINGS, LLC
and SECURE COMMUNITY, LLC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS, LLC,
a Virginia limited liability company and
SECURE COMMUNITY, LLC, a
Virginia limited liability company,
Plaintiffs,
vs.
CYBERLUX CORPORATION, a
Nevada Corporation; MARK D.
SCHMIDT, an individual,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Declaration of
David M. Keithly, Declaration of
William Welter and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.939 Page 1
of 12
entityobservation
CYBERLUX CORPORATION
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
David M. Keithly, State Bar No. 292101
dkeithly@mortensontaggart.com
Sara K. Ross, State Bar No. 346153
sross@mortensontaggart.com
MORTENSON TAGGART ADAMS LLP
300 Spectrum Center Drive, Suite 1200
Irvine, California 92618
Telephone: (949) 774-2224
Facsimile: (949) 774-2545
Attorneys for Plaintiffs
ATLANTIC WAVE HOLDINGS, LLC
and SECURE COMMUNITY, LLC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS, LLC,
a Virginia limited liability company and
SECURE COMMUNITY, LLC, a
Virginia limited liability company,
Plaintiffs,
vs.
CYBERLUX CORPORATION, a
Nevada Corporation; MARK D.
SCHMIDT, an individual,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Declaration of
David M. Keithly, Declaration of
William Welter and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.939 Page 1
of 12
entityobservation
MARK D. SCHMIDT
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
David M. Keithly, State Bar No. 292101
dkeithly@mortensontaggart.com
Sara K. Ross, State Bar No. 346153
sross@mortensontaggart.com
MORTENSON TAGGART ADAMS LLP
300 Spectrum Center Drive, Suite 1200
Irvine, California 92618
Telephone: (949) 774-2224
Facsimile: (949) 774-2545
Attorneys for Plaintiffs
ATLANTIC WAVE HOLDINGS, LLC
and SECURE COMMUNITY, LLC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS, LLC,
a Virginia limited liability company and
SECURE COMMUNITY, LLC, a
Virginia limited liability company,
Plaintiffs,
vs.
CYBERLUX CORPORATION, a
Nevada Corporation; MARK D.
SCHMIDT, an individual,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Declaration of
David M. Keithly, Declaration of
William Welter and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.939 Page 1
of 12
entityobservation
David M. Keithly
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
David M. Keithly, State Bar No. 292101
dkeithly@mortensontaggart.com
Sara K. Ross, State Bar No. 346153
sross@mortensontaggart.com
MORTENSON TAGGART ADAMS LLP
300 Spectrum Center Drive, Suite 1200
Irvine, California 92618
Telephone: (949) 774-2224
Facsimile: (949) 774-2545
Attorneys for Plaintiffs
ATLANTIC WAVE HOLDINGS, LLC
and SECURE COMMUNITY, LLC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS, LLC,
a Virginia limited liability company and
SECURE COMMUNITY, LLC, a
Virginia limited liability company,
Plaintiffs,
vs.
CYBERLUX CORPORATION, a
Nevada Corporation; MARK D.
SCHMIDT, an individual,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Declaration of
David M. Keithly, Declaration of
William Welter and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.939 Page 1
of 12
entityobservation
William Welter
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
David M. Keithly, State Bar No. 292101
dkeithly@mortensontaggart.com
Sara K. Ross, State Bar No. 346153
sross@mortensontaggart.com
MORTENSON TAGGART ADAMS LLP
300 Spectrum Center Drive, Suite 1200
Irvine, California 92618
Telephone: (949) 774-2224
Facsimile: (949) 774-2545
Attorneys for Plaintiffs
ATLANTIC WAVE HOLDINGS, LLC
and SECURE COMMUNITY, LLC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS, LLC,
a Virginia limited liability company and
SECURE COMMUNITY, LLC, a
Virginia limited liability company,
Plaintiffs,
vs.
CYBERLUX CORPORATION, a
Nevada Corporation; MARK D.
SCHMIDT, an individual,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Declaration of
David M. Keithly, Declaration of
William Welter and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.939 Page 1
of 12
entityobservation
Federico J. Zablah
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
David M. Keithly, State Bar No. 292101
dkeithly@mortensontaggart.com
Sara K. Ross, State Bar No. 346153
sross@mortensontaggart.com
MORTENSON TAGGART ADAMS LLP
300 Spectrum Center Drive, Suite 1200
Irvine, California 92618
Telephone: (949) 774-2224
Facsimile: (949) 774-2545
Attorneys for Plaintiffs
ATLANTIC WAVE HOLDINGS, LLC
and SECURE COMMUNITY, LLC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS, LLC,
a Virginia limited liability company and
SECURE COMMUNITY, LLC, a
Virginia limited liability company,
Plaintiffs,
vs.
CYBERLUX CORPORATION, a
Nevada Corporation; MARK D.
SCHMIDT, an individual,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Declaration of
David M. Keithly, Declaration of
William Welter and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.939 Page 1
of 12
entityobservation
Datron
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MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Plaintiffs Atlantic Wave Holdings, LLC and Secure Community, LLC
(collectively, “Plaintiffs”) submit this supplemental update to highlight new and
critical developments underscoring the urgency for immediate judicial intervention.
Plaintiffs domesticated their Virginia judgment in California in February 2024.
Plaintiffs filed this action in San Diego because Defendants' only remaining
significant asset is Datron, a company located in Vista, California, making local court
involvement essential. Shortly after Plaintiffs domesticated their judgment, on March
11, 2024, Defendants removed this action to federal court and filed a motion to vacate
and stay the judgment. During this period, Plaintiffs learned that Defendants received
over $38 million in early September 2023 from a U.S. Government contract, which
should have been used to satisfy Defendants’ Judgment debt. However, Defendants
falsely stated in October that there had been "no drone sales," contradicting evidence
of their revenue, and refused to pay.
Plaintiffs also recently learned that in April 2024, amidst ongoing litigation,
Defendants assigned all revenue from the drone contract to Legalist SVP III—a
factoring company—effectively selling the drone contract without informing
Plaintiffs, stockholders, or the Court. This covert action deprived Plaintiffs of critical
revenue that should have been used to satisfy the Judgment—and violated the
Settlement Agreement, which mandates disclosure of all material information related
to drone sales and status. Despite their financial obligations, Defendants have engaged
in a troubling pattern of deceit and strategic delay aimed at evading their obligations
and dissipating assets intended to satisfy the Judgment.
On August 9, 2024, the same Virginia court that issued the Judgment released
garnished funds to Plaintiffs totaling approximately $183,798.34 from PNC Bank and
$4,862.86 from Towne Bank. This release reaffirms the validity and immediate
enforceability of the June 28, 2023 Amended Final Order and Judgment. Despite this
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.940 Page 2
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eventattribution
Plaintiffs file further supplemental update opposing vacatur.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
David M. Keithly, State Bar No. 292101
dkeithly@mortensontaggart.com
Sara K. Ross, State Bar No. 346153
sross@mortensontaggart.com
MORTENSON TAGGART ADAMS LLP
300 Spectrum Center Drive, Suite 1200
Irvine, California 92618
Telephone: (949) 774-2224
Facsimile: (949) 774-2545
Attorneys for Plaintiffs
ATLANTIC WAVE HOLDINGS, LLC
and SECURE COMMUNITY, LLC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS, LLC,
a Virginia limited liability company and
SECURE COMMUNITY, LLC, a
Virginia limited liability company,
Plaintiffs,
vs.
CYBERLUX CORPORATION, a
Nevada Corporation; MARK D.
SCHMIDT, an individual,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Declaration of
David M. Keithly, Declaration of
William Welter and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.939 Page 1
of 12
eventattribution
Plaintiffs reportTexas hearing and temporary enforcement pause.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
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Settlement Agreement to inform Plaintiffs of any significant changes impacting
their financial standing (see Dkt. No. 24-1, §§ 7-8).
These admissions represent clear breaches of the Settlement Agreement, further
justifying the immediate enforcement of the Judgment. By failing to disclose material
facts and provide accurate financials, Cyberlux has violated the agreement's
transparency requirements, undermining the basis for any ongoing or future
negotiation regarding the Judgment debt.
Plaintiffs’ counsel’s experiences in Virginia illustrate the extent of Defendants’
non-compliance and obstruction. Defendants refuse to cooperate on scheduling
reasonable hearing dates, with their counsel unreasonably delaying proceedings by
claiming unavailability for months, despite the urgency of the matters at hand. (Zablah
Decl. ¶¶ 13-17; Dkt. No. 31 at ¶¶ 2-13). This tactic of delay allows Cyberlux to
continue to use the Virginia litigation as a shield against Plaintiffs' collection actions.
Crucially, Defendants' Virginia actions do not challenge the validity of the
underlying Judgment. (Zablah Decl., ¶ 8.) However, the mere filing of these
complaints, coupled with Defendants refusal to advance the litigation, has caused
confusion and led courts in both this jurisdiction and Texas to delay enforcement of
Plaintiffs' Judgment. This misuse of the legal process emphasizes the need for
immediate court intervention. Plaintiffs must be allowed to enforce their rightful
claims and secure the assets needed to satisfy the Judgment.
C. Texas Proceedings
Recent proceedings in Texas have highlighted the persistent obstruction tactics
employed by Defendants. On October 28, 2024, during a hearing on Cyberlux's
motion to vacate Plaintiffs’ domesticated Judgment, Defendants’ counsel
misrepresented to the Texas court that the Virginia court had issued a stay of
execution of the Judgment. (Keithly Decl., ¶ 2; Welter Decl., ¶¶ 10-11; see Zablah
Decl, ¶¶ 4-5.) This assertion was entirely false; no stay has been granted or even
considered in Virginia. (Zablah Decl. ¶ 5; Keithly Decl., ¶ 3; Welter Decl., ¶ 11).
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.947 Page 9
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Plaintiffs reportVirginia bank garnishment distributions.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Plaintiffs Atlantic Wave Holdings, LLC and Secure Community, LLC
(collectively, “Plaintiffs”) submit this supplemental update to highlight new and
critical developments underscoring the urgency for immediate judicial intervention.
Plaintiffs domesticated their Virginia judgment in California in February 2024.
Plaintiffs filed this action in San Diego because Defendants' only remaining
significant asset is Datron, a company located in Vista, California, making local court
involvement essential. Shortly after Plaintiffs domesticated their judgment, on March
11, 2024, Defendants removed this action to federal court and filed a motion to vacate
and stay the judgment. During this period, Plaintiffs learned that Defendants received
over $38 million in early September 2023 from a U.S. Government contract, which
should have been used to satisfy Defendants’ Judgment debt. However, Defendants
falsely stated in October that there had been "no drone sales," contradicting evidence
of their revenue, and refused to pay.
Plaintiffs also recently learned that in April 2024, amidst ongoing litigation,
Defendants assigned all revenue from the drone contract to Legalist SVP III—a
factoring company—effectively selling the drone contract without informing
Plaintiffs, stockholders, or the Court. This covert action deprived Plaintiffs of critical
revenue that should have been used to satisfy the Judgment—and violated the
Settlement Agreement, which mandates disclosure of all material information related
to drone sales and status. Despite their financial obligations, Defendants have engaged
in a troubling pattern of deceit and strategic delay aimed at evading their obligations
and dissipating assets intended to satisfy the Judgment.
On August 9, 2024, the same Virginia court that issued the Judgment released
garnished funds to Plaintiffs totaling approximately $183,798.34 from PNC Bank and
$4,862.86 from Towne Bank. This release reaffirms the validity and immediate
enforceability of the June 28, 2023 Amended Final Order and Judgment. Despite this
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.940 Page 2
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inferenceinference
The brief’s central evidential bridges need their underlying records: wire receipt to contractual drone-sale trigger, receivables assignment
The brief’s central evidential bridges need their underlying records: wire receipt to contractual drone-sale trigger, receivables assignment to contract sale, and termination to exhausted payment capacity. None follows merely from counsel’s labels.
inferenceinference
Plaintiffs’ asserted deemed admissions require their own procedural foundation; this advocacy summary cannot be stored as a direct Cyberlux
Plaintiffs’ asserted deemed admissions require their own procedural foundation; this advocacy summary cannot be stored as a direct Cyberlux admission or an adjudicated fraud finding.
inferenceinference
California’s acknowledged stay, the alleged absence of aVirginia stay and reportedTexas temporary pause are different procedural states. The
California’s acknowledged stay, the alleged absence of aVirginia stay and reportedTexas temporary pause are different procedural states. They must not be merged into a single global stay.
otherattribution
Complete supplied 12-page source reviewed at SHA-256 f4fdbb06ff5fc569c6941fcb03a9072fcbf530a3e5a5a4318a286989a60ec856. Source assertions, or
Complete supplied 12-page source reviewed at SHA-256 f4fdbb06ff5fc569c6941fcb03a9072fcbf530a3e5a5a4318a286989a60ec856. Source assertions, original visual features, filing/communication context and identified missing attachments are retained. Own registered SHA f4fdbb06ff5fc569c6941fcb03a9072fcbf530a3e5a5a4318a286989a60ec856 fully read natively pages1–12, including repeated argument and all cited RFA/amount details. Own renders1,8,12 checked caption, claimed-admission list and dated signature. No exhibits assumed included; no alternative version substituted.
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PLAINTIFFS’ FURTHER SUPPLEMENTAL UPDATE RE: MOTION TO VACATE MORTENSON
TAGGART
ADAMS LLP
David M. Keithly, State Bar No. 292101
dkeithly@mortensontaggart.com
Sara K. Ross, State Bar No. 346153
sross@mortensontaggart.com
MORTENSON TAGGART ADAMS LLP
300 Spectrum Center Drive, Suite 1200
Irvine, California 92618
Telephone: (949) 774-2224
Facsimile: (949) 774-2545
Attorneys for Plaintiffs
ATLANTIC WAVE HOLDINGS, LLC
and SECURE COMMUNITY, LLC
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
ATLANTIC WAVE HOLDINGS, LLC,
a Virginia limited liability company and
SECURE COMMUNITY, LLC, a
Virginia limited liability company,
Plaintiffs,
vs.
CYBERLUX CORPORATION, a
Nevada Corporation; MARK D.
SCHMIDT, an individual,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Declaration of
David M. Keithly, Declaration of
William Welter and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32 Filed 11/07/24 PageID.939 Page 1
of 12
questionquestion
What do the underlying wire, sales-trigger terms, assignment, termination records and actual disclosures establish beyond the brief’s charac
What do the underlying wire, sales-trigger terms, assignment, termination records and actual disclosures establish beyond the brief’s characterisations?
questionquestion
Were the RFAs served, unanswered and still operative as admissions, and what did theTexas transcript/order and Virginia docket actually show
Were the RFAs served, unanswered and still operative as admissions, and what did theTexas transcript/order and Virginia docket actually show?
questionquestion
How did the court ultimately decide vacatur/stay relief and account for garnished amounts?
distillateallegation
CONNECT
Reviewed relationships
The canvas follows the database: source to DISTIL record, DISTIL record to knowledge object, then reviewed relationship. Position alone means nothing.
Plaintiffs allege defendants did not answer RFAs served6September2024 by27September and invoke VirginiaRule4:11 to treat them as admitted. They list asserted admissions: approximately$15million drones shipped by31December2023 (RFA25), failure to provide sales documents (28), inaccurate financials inducing settlement (32), and sale/merger attempts in24months (24). The actual RFAs, service, responses and any withdrawal/admission order are not included.supportsPlaintiffs’ asserted deemed admissions require their own procedural foundation; this advocacy summary cannot be stored as a direct Cyberlux admission or an adjudicated fraud finding.
Specifically named source propositions support the bounded distinction or question.
Plaintiffs map those claimed admissions to settlement$5,000-per-drone and disclosure provisions (§§4.b,4.c,7,8,10), call them breaches, and allege defendants’July Virginia suits and scheduling delays did not challenge judgment validity. These legal and intent conclusions remain creditor advocacy.supportsPlaintiffs’ asserted deemed admissions require their own procedural foundation; this advocacy summary cannot be stored as a direct Cyberlux admission or an adjudicated fraud finding.
Specifically named source propositions support the bounded distinction or question.
Plaintiffs allege Cyberlux received over$38million from HII on8September2023 connected to drone sales, yet counsel said on10October2023 that no drones had been sold. They contend the payment should have satisfied the judgment. The wire and email are cited Welter exhibits, not included here; receipt, sales recognition and contractual payment trigger are not interchangeable without those records.supportsThe brief’s central evidential bridges need their underlying records: wire receipt to contractual drone-sale trigger, receivables assignment to contract sale, and termination to exhausted payment capacity. None follows merely from counsel’s labels.
Specifically named source propositions support the bounded distinction or question.
Plaintiffs say HII’s answer revealedMay2024 termination of the subcontract and allege defendants concealed termination while repeatedly promising imminent contract payment. They argue cancellation undermines recovery and makes Datron assets important. The brief does not quantify any termination settlement or establish that all potential post-termination receivables vanished.supportsWhat does the supplemental update add?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs allege defendants did not answer RFAs served6September2024 by27September and invoke VirginiaRule4:11 to treat them as admitted. They list asserted admissions: approximately$15million drones shipped by31December2023 (RFA25), failure to provide sales documents (28), inaccurate financials inducing settlement (32), and sale/merger attempts in24months (24). The actual RFAs, service, responses and any withdrawal/admission order are not included.supportsWere the RFAs served, unanswered and still operative as admissions, and what did theTexas transcript/order and Virginia docket actually show?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs say they domesticated the28June2023 Virginia judgment inCalifornia inFebruary2024 because Datron inVista was defendants’ only remaining significant asset, followed by11March removal and10April motion to vacate. They recount June writ/quash proceedings, a25June order stopping execution, and denial of aJuly bond request, while acknowledging California enforcement/discovery remained stayed. These procedural accounts require the cited docket records.supportsCalifornia’s acknowledged stay, the alleged absence of aVirginia stay and reportedTexas temporary pause are different procedural states. They must not be merged into a single global stay.
Specifically named source propositions support the bounded distinction or question.
Plaintiffs map those claimed admissions to settlement$5,000-per-drone and disclosure provisions (§§4.b,4.c,7,8,10), call them breaches, and allege defendants’July Virginia suits and scheduling delays did not challenge judgment validity. These legal and intent conclusions remain creditor advocacy.supportsWere the RFAs served, unanswered and still operative as admissions, and what did theTexas transcript/order and Virginia docket actually show?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs say HII’s answer revealedMay2024 termination of the subcontract and allege defendants concealed termination while repeatedly promising imminent contract payment. They argue cancellation undermines recovery and makes Datron assets important. The brief does not quantify any termination settlement or establish that all potential post-termination receivables vanished.supportsWhat do the underlying wire, sales-trigger terms, assignment, termination records and actual disclosures establish beyond the brief’s characterisations?
Specifically named source propositions support the bounded distinction or question.
The brief’s central evidential bridges need their underlying records: wire receipt to contractual drone-sale trigger, receivables assignment to contract sale, and termination to exhausted payment capacity. None follows merely from counsel’s labels.supportsWhat does the supplemental update add?
Specifically named source propositions support the bounded distinction or question.
The brief repeats a claimed pattern of concealment, asset dissipation and procedural delay to press for immediate enforcement. Its conclusion requests denial of vacatur and lifting theCalifornia stay; it does not show that the court granted either request.supportsHow did the court ultimately decide vacatur/stay relief and account for garnished amounts?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs say HII’s answer revealedMay2024 termination of the subcontract and allege defendants concealed termination while repeatedly promising imminent contract payment. They argue cancellation undermines recovery and makes Datron assets important. The brief does not quantify any termination settlement or establish that all potential post-termination receivables vanished.supportsThe brief’s central evidential bridges need their underlying records: wire receipt to contractual drone-sale trigger, receivables assignment to contract sale, and termination to exhausted payment capacity. None follows merely from counsel’s labels.
Specifically named source propositions support the bounded distinction or question.
California’s acknowledged stay, the alleged absence of aVirginia stay and reportedTexas temporary pause are different procedural states. They must not be merged into a single global stay.supportsWhat does the supplemental update add?
Specifically named source propositions support the bounded distinction or question.
The brief repeats a claimed pattern of concealment, asset dissipation and procedural delay to press for immediate enforcement. Its conclusion requests denial of vacatur and lifting theCalifornia stay; it does not show that the court granted either request.supportsWhat does the supplemental update add?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs allege defence counsel falsely told theTexas court on28October2024 that Virginia had stayed execution, asserting no Virginia stay existed or had been considered. They say Texas then paused enforcement30days for evidence while leaving discovery open. This relies on concurrent declarations and a referencedTexas order; the transcript, order and Virginia docket are not in this brief.supportsCalifornia’s acknowledged stay, the alleged absence of aVirginia stay and reportedTexas temporary pause are different procedural states. They must not be merged into a single global stay.
Specifically named source propositions support the bounded distinction or question.
Plaintiffs allege defence counsel falsely told theTexas court on28October2024 that Virginia had stayed execution, asserting no Virginia stay existed or had been considered. They say Texas then paused enforcement30days for evidence while leaving discovery open. This relies on concurrent declarations and a referencedTexas order; the transcript, order and Virginia docket are not in this brief.supportsWere the RFAs served, unanswered and still operative as admissions, and what did theTexas transcript/order and Virginia docket actually show?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs characterise theApril2024 Legalist assignment and12July payment direction as undisclosed diversion, effectively selling the drone contract and breaching settlement disclosure duties. They cite HII’s24October answer and Welter/Zablah materials, refer to Legalist as SVP III, and call it a factoring company. That characterisation and alleged secrecy remain plaintiffs’ positions, not a transaction-form or priority finding.supportsThe brief’s central evidential bridges need their underlying records: wire receipt to contractual drone-sale trigger, receivables assignment to contract sale, and termination to exhausted payment capacity. None follows merely from counsel’s labels.
Specifically named source propositions support the bounded distinction or question.
Plaintiffs characterise theApril2024 Legalist assignment and12July payment direction as undisclosed diversion, effectively selling the drone contract and breaching settlement disclosure duties. They cite HII’s24October answer and Welter/Zablah materials, refer to Legalist as SVP III, and call it a factoring company. That characterisation and alleged secrecy remain plaintiffs’ positions, not a transaction-form or priority finding.supportsWhat do the underlying wire, sales-trigger terms, assignment, termination records and actual disclosures establish beyond the brief’s characterisations?
Specifically named source propositions support the bounded distinction or question.
Atlantic Wave and Secure Community’s7November2024 further supplemental update, SDCalECF32 in3:24-cv-00482-RBM-VET, asks denial of defendants’ motion to vacate and lifting of the enforcement stay. Keithly signs; declarations by Keithly, Welter and Zablah are identified as concurrent filings but are not contained in this12-page brief.supportsHow did the court ultimately decide vacatur/stay relief and account for garnished amounts?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs report9August2024 release of approximately$183,798.34 fromPNCBank and$4,862.86 fromTowneBank under Virginia garnishments. They infer continuing validity/enforceability of the judgment from those releases. The underlying release orders are cited separately, and this inference does not automatically resolve the separate California vacatur/stay motion.supportsCalifornia’s acknowledged stay, the alleged absence of aVirginia stay and reportedTexas temporary pause are different procedural states. They must not be merged into a single global stay.
Specifically named source propositions support the bounded distinction or question.
Plaintiffs allege defendants did not answer RFAs served6September2024 by27September and invoke VirginiaRule4:11 to treat them as admitted. They list asserted admissions: approximately$15million drones shipped by31December2023 (RFA25), failure to provide sales documents (28), inaccurate financials inducing settlement (32), and sale/merger attempts in24months (24). The actual RFAs, service, responses and any withdrawal/admission order are not included.supportsWhat does the supplemental update add?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs report9August2024 release of approximately$183,798.34 fromPNCBank and$4,862.86 fromTowneBank under Virginia garnishments. They infer continuing validity/enforceability of the judgment from those releases. The underlying release orders are cited separately, and this inference does not automatically resolve the separate California vacatur/stay motion.supportsHow did the court ultimately decide vacatur/stay relief and account for garnished amounts?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs characterise theApril2024 Legalist assignment and12July payment direction as undisclosed diversion, effectively selling the drone contract and breaching settlement disclosure duties. They cite HII’s24October answer and Welter/Zablah materials, refer to Legalist as SVP III, and call it a factoring company. That characterisation and alleged secrecy remain plaintiffs’ positions, not a transaction-form or priority finding.supportsWhat does the supplemental update add?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs allege Cyberlux received over$38million from HII on8September2023 connected to drone sales, yet counsel said on10October2023 that no drones had been sold. They contend the payment should have satisfied the judgment. The wire and email are cited Welter exhibits, not included here; receipt, sales recognition and contractual payment trigger are not interchangeable without those records.supportsWhat does the supplemental update add?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs’ asserted deemed admissions require their own procedural foundation; this advocacy summary cannot be stored as a direct Cyberlux admission or an adjudicated fraud finding.supportsWhat does the supplemental update add?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs allege defence counsel falsely told theTexas court on28October2024 that Virginia had stayed execution, asserting no Virginia stay existed or had been considered. They say Texas then paused enforcement30days for evidence while leaving discovery open. This relies on concurrent declarations and a referencedTexas order; the transcript, order and Virginia docket are not in this brief.supportsWhat does the supplemental update add?
Specifically named source propositions support the bounded distinction or question.
Plaintiffs allege Cyberlux received over$38million from HII on8September2023 connected to drone sales, yet counsel said on10October2023 that no drones had been sold. They contend the payment should have satisfied the judgment. The wire and email are cited Welter exhibits, not included here; receipt, sales recognition and contractual payment trigger are not interchangeable without those records.supportsWhat do the underlying wire, sales-trigger terms, assignment, termination records and actual disclosures establish beyond the brief’s characterisations?
Specifically named source propositions support the bounded distinction or question.
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