Each card carries the governed distillate name from the database. Open the quoted anchor before relying on the interpretation.
observationobservation
Bank-recorded HII-labelled ACH credit: $38,700,600 on 8 September 2023; September closing balance $15,481,772.49.
Read the anchor · page 6
Image suase 6898BZ408| 99ept 32-3 filed hg 2024...
of 10
Account Number:
›O-
• TOWNE BANK
Statement Date:
09/30/202
Items Enclosed:
P.O. Box 2818
Page:
Norfolk, VA 23501-2818
Return Service Requested
Member Service Information
52454 MTB3733S093023092629 01 000000000 52454 010
Lost or Stolen Card: 888-638-6718
CYBERLUX CORPORATION
Email Inquiries: info@townebank.com
Visit Us Online: www.townebank.com
Visit Us on Facebook! www.facebook.com/townebank
•
Account Assistance: 919-415-4377
52454 0228259 0001-0009 0000000000000000
As always, online banking provides the latest balance information for your accounts!
VALUE CLASSIC
Account Number:
XXXXXX6642
Balance Summary
Beginning Balance as of 09/01/23
$20,087.01
+ Deposits and Credits (10)
$38,701,840.13
- Checks Posted (0)
$0.00
- Withdrawals and Debits (118)
$23,240,154.65
Ending Balance as of 09/30/23
$15,481,772.49
Number of Days in Statement Period
30
Items Enclosed
1
Transaction Detail
Date
Description
Deposits
Withdrawals
Sep 01
-$6,000.00
Sep 01
-$40.00
Sep 05
-$8,000.00
Sep 06
-$3,000.00
Serving Others. Enriching Lives.®
21 of 90
52454 0228259 0001-0009 MTB37335093023092629 01 L 5245410/28/2024, 1:49 AM
[Analyst visual transcription: TowneBank statement date visibly reads 09/30/2023, page 1 of 9. Monthly summary amounts visually checked; source redactions retained.]
observationobservation
Declaration filed/signed 7 November 2024; included Grimes email dated 10 October 2023 and prior Welter message 9 October.
Read the anchor · page 1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DECLARATION OF WILLIAM WELTER
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 and MARK D.
SCHMIDT,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
DECLARATION OF WILLIAM
WELTER IN SUPPORT OF
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC’S AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Further
Supplemental Update, Declaration of
David M. Keithly and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.992 Page 1
of 10
claimallegation
William Welter’s ten-page declaration supports AWH and Secure Community’s further supplemental update in SDCA 3:24-cv-00482-RBM-VET, ECF 32-
William Welter’s ten-page declaration supports AWH and Secure Community’s further supplemental update in SDCA 3:24-cv-00482-RBM-VET, ECF 32-3, filed 7 November 2024. He identifies himself as managing director of both plaintiffs and signs /s/ William Welter on that date at Tappahannock, Virginia under penalty of perjury. Four declaration pages precede Exhibit A and Exhibit B.
Read the anchor · page 1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DECLARATION OF WILLIAM WELTER
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 and MARK D.
SCHMIDT,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
DECLARATION OF WILLIAM
WELTER IN SUPPORT OF
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC’S AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Further
Supplemental Update, Declaration of
David M. Keithly and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.992 Page 1
of 10
claimallegation
Welter alleges asset-sale attempts, dilatory Virginia suits filed 8 July 2024 and loss of judgment collateral, relying on separate Zablah an
Welter alleges asset-sale attempts, dilatory Virginia suits filed 8 July 2024 and loss of judgment collateral, relying on separate Zablah and docket materials. He says he attended the 28 October Texas hearing telephonically and claims a false Virginia-stay statement misled the court into a thirty-day execution stay while discovery continued. This includes an express acknowledgement of the limited stay; his causal/motive account remains an allegation requiring the full transcript.
Read the anchor · page 3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-2-
DECLARATION OF WILLIAM WELTER
MORTENSON
TAGGART
ADAMS LLP
10-12, Ex. D at ¶¶ 7-10). For more than a year now, this contract was repeatedly cited
by Defendants as the primary source of funds to satisfy the Judgment. The
cancellation of the contract is particularly significant because, for months, Defendants
repeatedly asked Plaintiffs to delay enforcement of the Judgment, claiming they were
about to receive an imminent payment under the contract sufficient to satisfy their
Judgment debt to Plaintiffs. The failure to disclose this termination deprived Plaintiffs
of critical revenue that should have been used to satisfy the Judgment, violated the
Settlement Agreement's terms, and casts serious doubt on Defendants’ ability to pay
the Judgment debt.
5. In April 2024, during the litigation and in anticipation of our writ,
Defendants transferred all revenue from the drone contract by assigning it to Legalist.
(Zablah Decl., ¶¶ 11-13, Ex. C at ¶¶ 12-14.) This was done without informing
Plaintiffs, stockholders, or the Court, in violation of the Settlement Agreement, which
requires disclosure of all material information related to drone sales and status (Dkt.
No. 24-1 at ¶ 8).
6. Defendants reconfirmed this assignment in July 2024, further
entrenching their strategy to divert funds away from satisfying the Judgment (Zablah
Decl., ¶ 11, Ex. C at ¶ 15).
7. Despite receiving substantial funds, Defendants falsely stated in October
2023 that there had been "no drone sales," as per an email from Doug Grimes. This
falsehood aligns with Defendants’ pattern of misrepresentation intended to delay and
obfuscate. A true and correct copy of the October 10, 2023 email from Doug Grimes
to me is attached hereto as Exhibit B.
8. Throughout this period, Defendants also attempted to sell company
assets and filed lawsuits in Virginia, misleading courts in both California and Texas
by asserting that these filings were dispositive of the Judgment’s validity. However,
since filing these lawsuits on July 8, 2024, Defendants have taken no substantive
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.994 Page 3
of 10
claimallegation
The two exhibits provide selected bank and email material rather than the full settlement, financing, termination or hearing record. Receipt
The two exhibits provide selected bank and email material rather than the full settlement, financing, termination or hearing record. Receipt of a large advance, actual sales, acceptance, cash withdrawals and legal entitlement to those funds are separate propositions. The affidavit’s broader conclusions do not erase those evidential boundaries.
Read the anchor · page 4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-3-
DECLARATION OF WILLIAM WELTER
MORTENSON
TAGGART
ADAMS LLP
action, continuing their dilatory tactics (Zablah Decl., ¶¶ 13-17; Dkt No. 31 at ¶¶ 2-
13).
9. Plaintiffs’ Judgment is rapidly losing all collateral due to Defendants'
continued stalling and asset diversion strategies, necessitating swift judicial
intervention to prevent further injustice.
10. On October 28, 2024, I attended the hearing telephonically on Cyberlux's
motion to vacate Plaintiffs’ domesticated Judgment in Texas. During this hearing, I
heard Defendants’ counsel falsely represent to the court that a stay of enforcement
was entered in the Virginia proceedings.
11. The representation made by Defendants’ counsel was entirely false, as
no stay has been granted or even considered in Virginia. (Zablah Decl., ¶¶ 4-5.) This
misrepresentation misled the Texas court into temporarily staying enforcement of the
Judgment for 30 days to allow Defendants the opportunity to present evidence of the
supposed stay, although it did not halt discovery.
I declare under penalty of perjury under the laws of the State of California that
the foregoing is true and correct. This declaration was executed on November 7,
2024, at Tappahannock, VA.
/s/ William Welter______________________
William Welter
Managing Director
Atlantic Wave Holdings, LLC
Secure Community, LLC
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.995 Page 4
of 10
claimallegation
Welter says Cyberlux assigned future government-contract receipts to Legalist in April 2024 and reconfirmed the assignment in July, without
Welter says Cyberlux assigned future government-contract receipts to Legalist in April 2024 and reconfirmed the assignment in July, without notice to plaintiffs, stockholders or the court. He calls this a diversion contrary to settlement disclosure obligations and describes Legalist as a factoring company, spelling its name Legalist SVP III. Those timing, breach and motive assertions cite Zablah and settlement materials not embedded here; the cited lender name is not silently treated as a separate entity from SPV III.
Read the anchor · page 2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-1-
DECLARATION OF WILLIAM WELTER
MORTENSON
TAGGART
ADAMS LLP
DECLARATION OF WILLIAM WELTER
I, William Welter, declare as follows:
1. I am the Managing Director of Atlantic Wave Holdings, LLC and Secure
Community, LLC, Plaintiffs in this matter. I have personal knowledge of the facts
stated herein and, if called upon to testify, I could and would competently testify to
them.
2. In connection with our attempts to garnish Defendants’ funds to satisfy
the Virginia Judgment, Plaintiffs recently discovered that Defendants assigned their
interests in future payments from a U.S. Government contract that should have been
used to pay Plaintiffs, to Legalist SVP III (“Legalist”), a factoring company, without
notifying Plaintiffs. (Declaration of Federico J. Zablah in Support of Plaintiffs’
Further Supplemental Update (“Zablah Decl.”), ¶¶ 10-12, Ex. D at ¶¶ 12-15.) A
factoring company purchases accounts receivable from businesses at a discount,
providing them with immediate cash flow. The factoring company then collects the
payments directly from the customers as they become due. This assignment was made
despite Defendants' repeated assurances that funds from the contract would be used
to satisfy the Judgment. The assignment effectively shields these assets from
Plaintiffs, even if the contract had remained active.
3. Plaintiffs served discovery on Towne Bank in connection with a
garnishment action Plaintiffs initiated to garnish Defendants’ funds held there and
Towne Bank produced a statement of Cyberlux’s account dated September 30, 2023.
The statement shows that Cyberlux received a $38,700,600 payment, via wire from
“HII Technical” on September 8, 2023, which is linked to drone sales and should have
been used to satisfy the Judgment in full. A true and correct copy of Cyberlux’s
September 30, 2023 statement from Towne Bank is attached hereto as Exhibit A,
with unrelated information redacted.
4. Plaintiffs also recently discovered that Cyberlux failed to disclose the
termination of its U.S. Government drone contract in May 2024. (Zablah Decl., ¶¶
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.993 Page 2
of 10
claimallegation
Welter alleges the drone contract was terminated in May 2024 without disclosure despite repeated promises of imminent payment, depriving pla
Welter alleges the drone contract was terminated in May 2024 without disclosure despite repeated promises of imminent payment, depriving plaintiffs of revenue and raising payment concerns. The termination, promises, settlement terms and actual obligation to apply specific receipts require their own instruments; the source is not a ruling that every asserted breach or cause is proved.
Read the anchor · page 2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-1-
DECLARATION OF WILLIAM WELTER
MORTENSON
TAGGART
ADAMS LLP
DECLARATION OF WILLIAM WELTER
I, William Welter, declare as follows:
1. I am the Managing Director of Atlantic Wave Holdings, LLC and Secure
Community, LLC, Plaintiffs in this matter. I have personal knowledge of the facts
stated herein and, if called upon to testify, I could and would competently testify to
them.
2. In connection with our attempts to garnish Defendants’ funds to satisfy
the Virginia Judgment, Plaintiffs recently discovered that Defendants assigned their
interests in future payments from a U.S. Government contract that should have been
used to pay Plaintiffs, to Legalist SVP III (“Legalist”), a factoring company, without
notifying Plaintiffs. (Declaration of Federico J. Zablah in Support of Plaintiffs’
Further Supplemental Update (“Zablah Decl.”), ¶¶ 10-12, Ex. D at ¶¶ 12-15.) A
factoring company purchases accounts receivable from businesses at a discount,
providing them with immediate cash flow. The factoring company then collects the
payments directly from the customers as they become due. This assignment was made
despite Defendants' repeated assurances that funds from the contract would be used
to satisfy the Judgment. The assignment effectively shields these assets from
Plaintiffs, even if the contract had remained active.
3. Plaintiffs served discovery on Towne Bank in connection with a
garnishment action Plaintiffs initiated to garnish Defendants’ funds held there and
Towne Bank produced a statement of Cyberlux’s account dated September 30, 2023.
The statement shows that Cyberlux received a $38,700,600 payment, via wire from
“HII Technical” on September 8, 2023, which is linked to drone sales and should have
been used to satisfy the Judgment in full. A true and correct copy of Cyberlux’s
September 30, 2023 statement from Towne Bank is attached hereto as Exhibit A,
with unrelated information redacted.
4. Plaintiffs also recently discovered that Cyberlux failed to disclose the
termination of its U.S. Government drone contract in May 2024. (Zablah Decl., ¶¶
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.993 Page 2
of 10
claimallegation
Welter says TowneBank produced a September 2023 statement in discovery and describes a $38,700,600 receipt on 8 September from HII Technical
Welter says TowneBank produced a September 2023 statement in discovery and describes a $38,700,600 receipt on 8 September from HII Technical as a wire that should have satisfied the judgment. The selected bank page instead labels the transaction ACH DEPOSIT. The amount/date are directly visible, while his transfer-type wording and entitlement conclusion retain their separate roles.
Read the anchor · page 2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-1-
DECLARATION OF WILLIAM WELTER
MORTENSON
TAGGART
ADAMS LLP
DECLARATION OF WILLIAM WELTER
I, William Welter, declare as follows:
1. I am the Managing Director of Atlantic Wave Holdings, LLC and Secure
Community, LLC, Plaintiffs in this matter. I have personal knowledge of the facts
stated herein and, if called upon to testify, I could and would competently testify to
them.
2. In connection with our attempts to garnish Defendants’ funds to satisfy
the Virginia Judgment, Plaintiffs recently discovered that Defendants assigned their
interests in future payments from a U.S. Government contract that should have been
used to pay Plaintiffs, to Legalist SVP III (“Legalist”), a factoring company, without
notifying Plaintiffs. (Declaration of Federico J. Zablah in Support of Plaintiffs’
Further Supplemental Update (“Zablah Decl.”), ¶¶ 10-12, Ex. D at ¶¶ 12-15.) A
factoring company purchases accounts receivable from businesses at a discount,
providing them with immediate cash flow. The factoring company then collects the
payments directly from the customers as they become due. This assignment was made
despite Defendants' repeated assurances that funds from the contract would be used
to satisfy the Judgment. The assignment effectively shields these assets from
Plaintiffs, even if the contract had remained active.
3. Plaintiffs served discovery on Towne Bank in connection with a
garnishment action Plaintiffs initiated to garnish Defendants’ funds held there and
Towne Bank produced a statement of Cyberlux’s account dated September 30, 2023.
The statement shows that Cyberlux received a $38,700,600 payment, via wire from
“HII Technical” on September 8, 2023, which is linked to drone sales and should have
been used to satisfy the Judgment in full. A true and correct copy of Cyberlux’s
September 30, 2023 statement from Towne Bank is attached hereto as Exhibit A,
with unrelated information redacted.
4. Plaintiffs also recently discovered that Cyberlux failed to disclose the
termination of its U.S. Government drone contract in May 2024. (Zablah Decl., ¶¶
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.993 Page 2
of 10
claimallegation
The September statement summary for Cyberlux’s account ending 6642 shows opening balance $20,087.01 on 1 September, ten deposits/credits tot
The September statement summary for Cyberlux’s account ending 6642 shows opening balance $20,087.01 on 1 September, ten deposits/credits totalling $38,701,840.13, no posted checks, 118 withdrawals/debits totalling $23,240,154.65, and closing balance $15,481,772.49 on 30 September. The displayed equation reconciles exactly: opening plus credits minus debits equals closing. The thirty-day statement period and one enclosed item are displayed.
Read the anchor · page 6
Image suase 6898BZ408| 99ept 32-3 filed hg 2024...
of 10
Account Number:
›O-
• TOWNE BANK
Statement Date:
09/30/202
Items Enclosed:
P.O. Box 2818
Page:
Norfolk, VA 23501-2818
Return Service Requested
Member Service Information
52454 MTB3733S093023092629 01 000000000 52454 010
Lost or Stolen Card: 888-638-6718
CYBERLUX CORPORATION
Email Inquiries: info@townebank.com
Visit Us Online: www.townebank.com
Visit Us on Facebook! www.facebook.com/townebank
•
Account Assistance: 919-415-4377
52454 0228259 0001-0009 0000000000000000
As always, online banking provides the latest balance information for your accounts!
VALUE CLASSIC
Account Number:
XXXXXX6642
Balance Summary
Beginning Balance as of 09/01/23
$20,087.01
+ Deposits and Credits (10)
$38,701,840.13
- Checks Posted (0)
$0.00
- Withdrawals and Debits (118)
$23,240,154.65
Ending Balance as of 09/30/23
$15,481,772.49
Number of Days in Statement Period
30
Items Enclosed
1
Transaction Detail
Date
Description
Deposits
Withdrawals
Sep 01
-$6,000.00
Sep 01
-$40.00
Sep 05
-$8,000.00
Sep 06
-$3,000.00
Serving Others. Enriching Lives.®
21 of 90
52454 0228259 0001-0009 MTB37335093023092629 01 L 5245410/28/2024, 1:49 AM
[Analyst visual transcription: TowneBank statement date visibly reads 09/30/2023, page 1 of 9. Monthly summary amounts visually checked; source redactions retained.]
claimallegation
The visible 8 September entry is ACH DEPOSIT, HII TECHNICAL SO followed by redaction, for $38,700,600.00. It is evidence of the bank-recorde
The visible 8 September entry is ACH DEPOSIT, HII TECHNICAL SO followed by redaction, for $38,700,600.00. It is evidence of the bank-recorded account credit, not by itself identification of contract terms, units accepted, earned revenue, restricted use or judgment-payoff entitlement. The visible originator fragment is not expanded beyond what is shown.
Read the anchor · page 8
+ TOWNE BANK
Account Owner:
CYBERLUX CORPORATION
Statement Date:
09/30/2023
Page :
2 of 9
P.O. Box 2818
Norfolk, VA 23501-2818
Return Service Requested
Transaction Detail (Continued)
Date
Description
Deposits
Withdrawals
Sep 07
-$750.00
52454 0228261 0002-0009 00000001
Sep 08
ACH DEPOSIT
$38,700,600.00
HII TECHNICAL SO
Sep 08
-$3,000,000.00
Sep 08
-$575,000.00
Sep 08
-$250,000.00
0000000
Sep 08
-$100,000.00
Sep 08
-$100,000.00
Sep 08
-$89,477.76
Sep 08
-$85,768.25
Sep 08
-$50,000.00
Sep 08
-$50,000.00
Sep 08
-$25,000.00
Sep 08
-$18,540.35
Sep 08
-$10,500.00
Sep 08
-$10,000.00
Sep 08
-$10,000.00
Sep 08
-$6,500.00
Sep 08
-$40.00
Sep 08
-$40.00
Sep 08
-$40.00
Sep 08
-$40.00
Sep 11
$120.00
Sep 11
$120.00
23 of 90
52454 0228261 0002-0009 MTB3733S093023092629 01 L 5245410/28/2024, 1:49 AM
[Analyst visual transcription: Page 2 of 9 visibly labels the $38,700,600 credit ACH DEPOSIT and HII TECHNICAL SO followed by redaction. All listed same-day debit amounts visually checked.]
claimallegation
Visible earlier debits are $6,000 and $40 on 1 September, $8,000 on 5 September, $3,000 on 6 September and $750 on 7 September. The shown 8
Visible earlier debits are $6,000 and $40 on 1 September, $8,000 on 5 September, $3,000 on 6 September and $750 on 7 September. The shown 8 September debits comprise $3,000,000, $575,000, $250,000, two $100,000 entries, $89,477.76, $85,768.25, two $50,000 entries, $25,000, $18,540.35, $10,500, two $10,000 entries, $6,500 and four $40 entries, totalling $4,380,946.36. Two $120 credits appear on 11 September. Descriptions are redacted, so payees and purposes cannot be assigned from these selected rows.
Read the anchor · page 6
Image suase 6898BZ408| 99ept 32-3 filed hg 2024...
of 10
Account Number:
›O-
• TOWNE BANK
Statement Date:
09/30/202
Items Enclosed:
P.O. Box 2818
Page:
Norfolk, VA 23501-2818
Return Service Requested
Member Service Information
52454 MTB3733S093023092629 01 000000000 52454 010
Lost or Stolen Card: 888-638-6718
CYBERLUX CORPORATION
Email Inquiries: info@townebank.com
Visit Us Online: www.townebank.com
Visit Us on Facebook! www.facebook.com/townebank
•
Account Assistance: 919-415-4377
52454 0228259 0001-0009 0000000000000000
As always, online banking provides the latest balance information for your accounts!
VALUE CLASSIC
Account Number:
XXXXXX6642
Balance Summary
Beginning Balance as of 09/01/23
$20,087.01
+ Deposits and Credits (10)
$38,701,840.13
- Checks Posted (0)
$0.00
- Withdrawals and Debits (118)
$23,240,154.65
Ending Balance as of 09/30/23
$15,481,772.49
Number of Days in Statement Period
30
Items Enclosed
1
Transaction Detail
Date
Description
Deposits
Withdrawals
Sep 01
-$6,000.00
Sep 01
-$40.00
Sep 05
-$8,000.00
Sep 06
-$3,000.00
Serving Others. Enriching Lives.®
21 of 90
52454 0228259 0001-0009 MTB37335093023092629 01 L 5245410/28/2024, 1:49 AM
[Analyst visual transcription: TowneBank statement date visibly reads 09/30/2023, page 1 of 9. Monthly summary amounts visually checked; source redactions retained.]
claimallegation
Exhibit A contains statement pages numbered 1 of 9 and 2 of 9 plus a generic reconciliation/consumer-notice reverse; other statement pages a
Exhibit A contains statement pages numbered 1 of 9 and 2 of 9 plus a generic reconciliation/consumer-notice reverse; other statement pages are not present. The embedded print shows positions 21–23 of a larger ninety-page export. The consumer-notice sixty-day language is generic boilerplate, not a live corporate dispute deadline. Visible print-path metadata and bank identifiers require separate disclosure review despite other redactions.
Read the anchor · page 6
Image suase 6898BZ408| 99ept 32-3 filed hg 2024...
of 10
Account Number:
›O-
• TOWNE BANK
Statement Date:
09/30/202
Items Enclosed:
P.O. Box 2818
Page:
Norfolk, VA 23501-2818
Return Service Requested
Member Service Information
52454 MTB3733S093023092629 01 000000000 52454 010
Lost or Stolen Card: 888-638-6718
CYBERLUX CORPORATION
Email Inquiries: info@townebank.com
Visit Us Online: www.townebank.com
Visit Us on Facebook! www.facebook.com/townebank
•
Account Assistance: 919-415-4377
52454 0228259 0001-0009 0000000000000000
As always, online banking provides the latest balance information for your accounts!
VALUE CLASSIC
Account Number:
XXXXXX6642
Balance Summary
Beginning Balance as of 09/01/23
$20,087.01
+ Deposits and Credits (10)
$38,701,840.13
- Checks Posted (0)
$0.00
- Withdrawals and Debits (118)
$23,240,154.65
Ending Balance as of 09/30/23
$15,481,772.49
Number of Days in Statement Period
30
Items Enclosed
1
Transaction Detail
Date
Description
Deposits
Withdrawals
Sep 01
-$6,000.00
Sep 01
-$40.00
Sep 05
-$8,000.00
Sep 06
-$3,000.00
Serving Others. Enriching Lives.®
21 of 90
52454 0228259 0001-0009 MTB37335093023092629 01 L 5245410/28/2024, 1:49 AM
[Analyst visual transcription: TowneBank statement date visibly reads 09/30/2023, page 1 of 9. Monthly summary amounts visually checked; source redactions retained.]
claimallegation
Welter calls an October 2023 no-drone-sales statement false. The attached page shows Grimes writing on 10 October at 3:40:36 pm EDT that it
Welter calls an October 2023 no-drone-sales statement false. The attached page shows Grimes writing on 10 October at 3:40:36 pm EDT that it is his understanding there have been no actual drone sales yet. The prior 9 October message from Welter acknowledges receipt of the October payment and asks how many drones were sold. Neither the payment amount nor a definition of actual sales appears. The email page is marked 1 of 2; its second page is absent.
Read the anchor · page 3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-2-
DECLARATION OF WILLIAM WELTER
MORTENSON
TAGGART
ADAMS LLP
10-12, Ex. D at ¶¶ 7-10). For more than a year now, this contract was repeatedly cited
by Defendants as the primary source of funds to satisfy the Judgment. The
cancellation of the contract is particularly significant because, for months, Defendants
repeatedly asked Plaintiffs to delay enforcement of the Judgment, claiming they were
about to receive an imminent payment under the contract sufficient to satisfy their
Judgment debt to Plaintiffs. The failure to disclose this termination deprived Plaintiffs
of critical revenue that should have been used to satisfy the Judgment, violated the
Settlement Agreement's terms, and casts serious doubt on Defendants’ ability to pay
the Judgment debt.
5. In April 2024, during the litigation and in anticipation of our writ,
Defendants transferred all revenue from the drone contract by assigning it to Legalist.
(Zablah Decl., ¶¶ 11-13, Ex. C at ¶¶ 12-14.) This was done without informing
Plaintiffs, stockholders, or the Court, in violation of the Settlement Agreement, which
requires disclosure of all material information related to drone sales and status (Dkt.
No. 24-1 at ¶ 8).
6. Defendants reconfirmed this assignment in July 2024, further
entrenching their strategy to divert funds away from satisfying the Judgment (Zablah
Decl., ¶ 11, Ex. C at ¶ 15).
7. Despite receiving substantial funds, Defendants falsely stated in October
2023 that there had been "no drone sales," as per an email from Doug Grimes. This
falsehood aligns with Defendants’ pattern of misrepresentation intended to delay and
obfuscate. A true and correct copy of the October 10, 2023 email from Doug Grimes
to me is attached hereto as Exhibit B.
8. Throughout this period, Defendants also attempted to sell company
assets and filed lawsuits in Virginia, misleading courts in both California and Texas
by asserting that these filings were dispositive of the Judgment’s validity. However,
since filing these lawsuits on July 8, 2024, Defendants have taken no substantive
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.994 Page 3
of 10
entityobservation
William Welter
Read the anchor · page 2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-1-
DECLARATION OF WILLIAM WELTER
MORTENSON
TAGGART
ADAMS LLP
DECLARATION OF WILLIAM WELTER
I, William Welter, declare as follows:
1. I am the Managing Director of Atlantic Wave Holdings, LLC and Secure
Community, LLC, Plaintiffs in this matter. I have personal knowledge of the facts
stated herein and, if called upon to testify, I could and would competently testify to
them.
2. In connection with our attempts to garnish Defendants’ funds to satisfy
the Virginia Judgment, Plaintiffs recently discovered that Defendants assigned their
interests in future payments from a U.S. Government contract that should have been
used to pay Plaintiffs, to Legalist SVP III (“Legalist”), a factoring company, without
notifying Plaintiffs. (Declaration of Federico J. Zablah in Support of Plaintiffs’
Further Supplemental Update (“Zablah Decl.”), ¶¶ 10-12, Ex. D at ¶¶ 12-15.) A
factoring company purchases accounts receivable from businesses at a discount,
providing them with immediate cash flow. The factoring company then collects the
payments directly from the customers as they become due. This assignment was made
despite Defendants' repeated assurances that funds from the contract would be used
to satisfy the Judgment. The assignment effectively shields these assets from
Plaintiffs, even if the contract had remained active.
3. Plaintiffs served discovery on Towne Bank in connection with a
garnishment action Plaintiffs initiated to garnish Defendants’ funds held there and
Towne Bank produced a statement of Cyberlux’s account dated September 30, 2023.
The statement shows that Cyberlux received a $38,700,600 payment, via wire from
“HII Technical” on September 8, 2023, which is linked to drone sales and should have
been used to satisfy the Judgment in full. A true and correct copy of Cyberlux’s
September 30, 2023 statement from Towne Bank is attached hereto as Exhibit A,
with unrelated information redacted.
4. Plaintiffs also recently discovered that Cyberlux failed to disclose the
termination of its U.S. Government drone contract in May 2024. (Zablah Decl., ¶¶
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.993 Page 2
of 10
entityobservation
ATLANTIC WAVE HOLDINGS, LLC
Read the anchor · page 1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DECLARATION OF WILLIAM WELTER
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 and MARK D.
SCHMIDT,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
DECLARATION OF WILLIAM
WELTER IN SUPPORT OF
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC’S AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Further
Supplemental Update, Declaration of
David M. Keithly and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.992 Page 1
of 10
entityobservation
SECURE COMMUNITY, LLC
Read the anchor · page 1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DECLARATION OF WILLIAM WELTER
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 and MARK D.
SCHMIDT,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
DECLARATION OF WILLIAM
WELTER IN SUPPORT OF
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC’S AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Further
Supplemental Update, Declaration of
David M. Keithly and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.992 Page 1
of 10
entityobservation
CYBERLUX CORPORATION
Read the anchor · page 1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DECLARATION OF WILLIAM WELTER
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 and MARK D.
SCHMIDT,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
DECLARATION OF WILLIAM
WELTER IN SUPPORT OF
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC’S AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Further
Supplemental Update, Declaration of
David M. Keithly and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.992 Page 1
of 10
entityobservation
TOWNE BANK
Read the anchor · page 6
Image suase 6898BZ408| 99ept 32-3 filed hg 2024...
of 10
Account Number:
›O-
• TOWNE BANK
Statement Date:
09/30/202
Items Enclosed:
P.O. Box 2818
Page:
Norfolk, VA 23501-2818
Return Service Requested
Member Service Information
52454 MTB3733S093023092629 01 000000000 52454 010
Lost or Stolen Card: 888-638-6718
CYBERLUX CORPORATION
Email Inquiries: info@townebank.com
Visit Us Online: www.townebank.com
Visit Us on Facebook! www.facebook.com/townebank
•
Account Assistance: 919-415-4377
52454 0228259 0001-0009 0000000000000000
As always, online banking provides the latest balance information for your accounts!
VALUE CLASSIC
Account Number:
XXXXXX6642
Balance Summary
Beginning Balance as of 09/01/23
$20,087.01
+ Deposits and Credits (10)
$38,701,840.13
- Checks Posted (0)
$0.00
- Withdrawals and Debits (118)
$23,240,154.65
Ending Balance as of 09/30/23
$15,481,772.49
Number of Days in Statement Period
30
Items Enclosed
1
Transaction Detail
Date
Description
Deposits
Withdrawals
Sep 01
-$6,000.00
Sep 01
-$40.00
Sep 05
-$8,000.00
Sep 06
-$3,000.00
Serving Others. Enriching Lives.®
21 of 90
52454 0228259 0001-0009 MTB37335093023092629 01 L 5245410/28/2024, 1:49 AM
[Analyst visual transcription: TowneBank statement date visibly reads 09/30/2023, page 1 of 9. Monthly summary amounts visually checked; source redactions retained.]
entityobservation
Doug Grimes
Read the anchor · page 10
1 of 2
From: Doug Grimes <dgrimes@allenchesson.com>
Date: October 10, 2023 at 3:40:36 PM EDT
To:
willwelter@aol.com
Subject: RE: Cyberlux
Will,
It’s my understanding there have been no actual drone sales yet. Happy to
discuss at your convenience.
Doug Grimes
Allen, Chesson & Grimes PLLC
505 N. Church Street
Charlotte, NC 28202
704-755-6012
dgrimes@allenchesson.com
www.allenchesson.com
Fr From om: : willwelter@aol.com <willwelter@aol.com>
Se Sen nt t: : Monday, October 9, 2023 12:39 PM
To To: : Doug Grimes <dgrimes@allenchesson.com>
Subje Subjec ct t: : Re: Cyberlux
Hi, Doug
We received the October payment. Can you advise how many drones were sold?
Thanks
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.1001 Page
10 of 10
[Analyst visual transcription: Grimes’s statement begins It’s my understanding; underlying Welter message acknowledges the October payment. This exhibit page is labelled 1 of 2.]
entityobservation
Legalist
Read the anchor · page 2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-1-
DECLARATION OF WILLIAM WELTER
MORTENSON
TAGGART
ADAMS LLP
DECLARATION OF WILLIAM WELTER
I, William Welter, declare as follows:
1. I am the Managing Director of Atlantic Wave Holdings, LLC and Secure
Community, LLC, Plaintiffs in this matter. I have personal knowledge of the facts
stated herein and, if called upon to testify, I could and would competently testify to
them.
2. In connection with our attempts to garnish Defendants’ funds to satisfy
the Virginia Judgment, Plaintiffs recently discovered that Defendants assigned their
interests in future payments from a U.S. Government contract that should have been
used to pay Plaintiffs, to Legalist SVP III (“Legalist”), a factoring company, without
notifying Plaintiffs. (Declaration of Federico J. Zablah in Support of Plaintiffs’
Further Supplemental Update (“Zablah Decl.”), ¶¶ 10-12, Ex. D at ¶¶ 12-15.) A
factoring company purchases accounts receivable from businesses at a discount,
providing them with immediate cash flow. The factoring company then collects the
payments directly from the customers as they become due. This assignment was made
despite Defendants' repeated assurances that funds from the contract would be used
to satisfy the Judgment. The assignment effectively shields these assets from
Plaintiffs, even if the contract had remained active.
3. Plaintiffs served discovery on Towne Bank in connection with a
garnishment action Plaintiffs initiated to garnish Defendants’ funds held there and
Towne Bank produced a statement of Cyberlux’s account dated September 30, 2023.
The statement shows that Cyberlux received a $38,700,600 payment, via wire from
“HII Technical” on September 8, 2023, which is linked to drone sales and should have
been used to satisfy the Judgment in full. A true and correct copy of Cyberlux’s
September 30, 2023 statement from Towne Bank is attached hereto as Exhibit A,
with unrelated information redacted.
4. Plaintiffs also recently discovered that Cyberlux failed to disclose the
termination of its U.S. Government drone contract in May 2024. (Zablah Decl., ¶¶
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.993 Page 2
of 10
eventattribution
The bank page records the HII-labelled $38,700,600 ACH credit.
Read the anchor · page 8
+ TOWNE BANK
Account Owner:
CYBERLUX CORPORATION
Statement Date:
09/30/2023
Page :
2 of 9
P.O. Box 2818
Norfolk, VA 23501-2818
Return Service Requested
Transaction Detail (Continued)
Date
Description
Deposits
Withdrawals
Sep 07
-$750.00
52454 0228261 0002-0009 00000001
Sep 08
ACH DEPOSIT
$38,700,600.00
HII TECHNICAL SO
Sep 08
-$3,000,000.00
Sep 08
-$575,000.00
Sep 08
-$250,000.00
0000000
Sep 08
-$100,000.00
Sep 08
-$100,000.00
Sep 08
-$89,477.76
Sep 08
-$85,768.25
Sep 08
-$50,000.00
Sep 08
-$50,000.00
Sep 08
-$25,000.00
Sep 08
-$18,540.35
Sep 08
-$10,500.00
Sep 08
-$10,000.00
Sep 08
-$10,000.00
Sep 08
-$6,500.00
Sep 08
-$40.00
Sep 08
-$40.00
Sep 08
-$40.00
Sep 08
-$40.00
Sep 11
$120.00
Sep 11
$120.00
23 of 90
52454 0228261 0002-0009 MTB3733S093023092629 01 L 5245410/28/2024, 1:49 AM
[Analyst visual transcription: Page 2 of 9 visibly labels the $38,700,600 credit ACH DEPOSIT and HII TECHNICAL SO followed by redaction. All listed same-day debit amounts visually checked.]
eventattribution
Grimes’s included email displays 10 October 2023.
Read the anchor · page 10
1 of 2
From: Doug Grimes <dgrimes@allenchesson.com>
Date: October 10, 2023 at 3:40:36 PM EDT
To:
willwelter@aol.com
Subject: RE: Cyberlux
Will,
It’s my understanding there have been no actual drone sales yet. Happy to
discuss at your convenience.
Doug Grimes
Allen, Chesson & Grimes PLLC
505 N. Church Street
Charlotte, NC 28202
704-755-6012
dgrimes@allenchesson.com
www.allenchesson.com
Fr From om: : willwelter@aol.com <willwelter@aol.com>
Se Sen nt t: : Monday, October 9, 2023 12:39 PM
To To: : Doug Grimes <dgrimes@allenchesson.com>
Subje Subjec ct t: : Re: Cyberlux
Hi, Doug
We received the October payment. Can you advise how many drones were sold?
Thanks
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.1001 Page
10 of 10
[Analyst visual transcription: Grimes’s statement begins It’s my understanding; underlying Welter message acknowledges the October payment. This exhibit page is labelled 1 of 2.]
eventattribution
Welter’s declaration is signed and filed 7 November 2024.
Read the anchor · page 1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DECLARATION OF WILLIAM WELTER
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 and MARK D.
SCHMIDT,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
DECLARATION OF WILLIAM
WELTER IN SUPPORT OF
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC’S AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Further
Supplemental Update, Declaration of
David M. Keithly and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.992 Page 1
of 10
inferenceinference
The bank evidence directly supports the large dated credit and reconciled monthly balances. It does not supply the redacted recipients or th
The bank evidence directly supports the large dated credit and reconciled monthly balances. It does not supply the redacted recipients or the other statement pages needed to explain the monthly outflows.
inferenceinference
The bank receipt and Grimes’s qualified actual-sales statement create a question about the transaction definition and timing. Receipt alone
The bank receipt and Grimes’s qualified actual-sales statement create a question about the transaction definition and timing. Receipt alone does not determine whether a sale, delivery, acceptance or commission-trigger event had occurred, or whether counsel knowingly misstated it.
otherattribution
Complete supplied 10-page source reviewed at SHA-256 d339b83d62b069a8f185d51603b11391c214a79c5d1bab657eb66ec4c56b4619. Source assertions, or
Complete supplied 10-page source reviewed at SHA-256 d339b83d62b069a8f185d51603b11391c214a79c5d1bab657eb66ec4c56b4619. Source assertions, original visual features, filing/communication context and identified missing attachments are retained. No unexamined later court outcome is inferred.
Read the anchor · page 1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DECLARATION OF WILLIAM WELTER
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 and MARK D.
SCHMIDT,
Defendants.
CASE NO. 3:24-cv-00482-RBM-VET
Honorable Ruth Bermudez Montenegro
DECLARATION OF WILLIAM
WELTER IN SUPPORT OF
PLAINTIFFS ATLANTIC WAVE
HOLDINGS, LLC’S AND SECURE
COMMUNITY, LLC’S FURTHER
SUPPLEMENTAL UPDATE RE:
DEFENDANTS’ MOTION TO
VACATE
Filed concurrently with Further
Supplemental Update, Declaration of
David M. Keithly and Declaration of
Federico J. Zablah
NO ORAL ARGUMENT UNLESS
ORDERED BY THE COURT
Case 3:24-cv-00482-RBM-VET Document 32-3 Filed 11/07/24 PageID.992 Page 1
of 10
questionquestion
Which full statement and unredacted transaction records identify the recipients, purposes and authorisations for the $23,240,154.65 monthly
Which full statement and unredacted transaction records identify the recipients, purposes and authorisations for the $23,240,154.65 monthly debits?
questionquestion
What contract and settlement definitions determine whether this receipt, later delivery or acceptance triggered the creditor’s payment entit
What contract and settlement definitions determine whether this receipt, later delivery or acceptance triggered the creditor’s payment entitlement?
questionquestion
What complete email chain and October payment record explain the qualified no-actual-sales statement and acknowledged payment?
questionquestion
How does the full hearing transcript treat counsel’s clarification and the judge’s basis for the limited stay?
allegation
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 are allocated 36 monthly wires of $21,459 and Strikepoint 36 monthly wires of $18,055.56, beginning July 2023 on each month’s first day and continuing until the respective consideration is paid. Each schedule repeats acceleration of outstanding judgment sums up to $5,000 per drone sold within 21 days of the first contract-payment receipt by Defendants or a parent, subsidiary, affiliate or assign. Performance and interpretation of that trigger require transaction evidence; the two repeated clauses are not silently combined into $10,000 per drone.referencesThe visible 8 September entry is ACH DEPOSIT, HII TECHNICAL SO followed by redaction, for $38,700,600.00. It is evidence of the bank-recorded account credit, not by itself identification of contract terms, units accepted, earned revenue, restricted use or judgment-payoff entitlement. The visible originator fragment is not expanded beyond what is shown.
The bank entry supplies a specific historical receipt relevant to the contractual trigger inquiry; it does not by itself establish sold-unit basis, full entitlement or competing priorities.
ARG alleges its efforts secured the HII subcontract and characterises $38,700,600 as initial payment and $25,769,369.03 as final payment received by Cyberlux from HII. That alleged recipient and payment characterisation require the bank and interpleader record; the pleading itself is not a receipt.referencesThe visible 8 September entry is ACH DEPOSIT, HII TECHNICAL SO followed by redaction, for $38,700,600.00. It is evidence of the bank-recorded account credit, not by itself identification of contract terms, units accepted, earned revenue, restricted use or judgment-payoff entitlement. The visible originator fragment is not expanded beyond what is shown.
Compare the exact initial payment allegation against the separately reviewed bank record. The bank entry supports a receipt amount/date, not ARG’s contractual share.
Welter alleges asset-sale attempts, dilatory Virginia suits filed 8 July 2024 and loss of judgment collateral, relying on separate Zablah and docket materials. He says he attended the 28 October Texas hearing telephonically and claims a false Virginia-stay statement misled the court into a thirty-day execution stay while discovery continued. This includes an express acknowledgement of the limited stay; his causal/motive account remains an allegation requiring the full transcript.referencesThe motion says prior emergency stay attempts all failed and specifically says Pennetti failed to persuade Gomez on October 28, 2024, quoting page 14 of that transcript. It also describes the separate $9,392.50 Virginia fee award as arising from a similar emergency motion and alleges non-payment. The partial hearing quotation does not include that transcript’s final ruling; the actual full transcript is a separate controlling dependency.
Welter expressly acknowledges a thirty-day stay with discovery continuing, conflicting with the later all-stay-attempts-failed description.
Welter alleges asset-sale attempts, dilatory Virginia suits filed 8 July 2024 and loss of judgment collateral, relying on separate Zablah and docket materials. He says he attended the 28 October Texas hearing telephonically and claims a false Virginia-stay statement misled the court into a thirty-day execution stay while discovery continued. This includes an express acknowledgement of the limited stay; his causal/motive account remains an allegation requiring the full transcript.referencesPennetti shifts to arguing that a requested stay and security require a Texas stay under section 35.006. After saying a bond has been posted, he answers the court that they do not have a bond and instead granted a security interest. On page 13 he expressly says they do not have an order and describes pending requests. Gomez rejects an automatic stay based solely on filing something and asks about a genuinely pursued, secured proceeding.
The full transcript records counsel’s acknowledgement of no bond and no order before relief; that clarification must accompany the allegation that the judge was misled.
The agreement grants a continuing all-assets lien and generally requires requested prior-lien subordination before funding, but expressly exempts the asserted Atlantic Wave, Secure Community and Strikepoint liens from obtaining such subordination. It describes those liens as disputed and identifies the two California proceedings. The warranties also except Atlantic Wave liens/litigation from specified clean-title, books/liabilities and no-pending-action statements. These exceptions are not releases, proof that the liens are invalid or an adjudication of priority.referencesWelter says Cyberlux assigned future government-contract receipts to Legalist in April 2024 and reconfirmed the assignment in July, without notice to plaintiffs, stockholders or the court. He calls this a diversion contrary to settlement disclosure obligations and describes Legalist as a factoring company, spelling its name Legalist SVP III. Those timing, breach and motive assertions cite Zablah and settlement materials not embedded here; the cited lender name is not silently treated as a separate entity from SPV III.
The lender agreement expressly mentions disputed AWH-related liens and litigation. This does not establish that Plaintiffs received assignment notice, as distinct from lender knowledge of their claims.
Plaintiffs are allocated 36 monthly wires of $21,459 and Strikepoint 36 monthly wires of $18,055.56, beginning July 2023 on each month’s first day and continuing until the respective consideration is paid. Each schedule repeats acceleration of outstanding judgment sums up to $5,000 per drone sold within 21 days of the first contract-payment receipt by Defendants or a parent, subsidiary, affiliate or assign. Performance and interpretation of that trigger require transaction evidence; the two repeated clauses are not silently combined into $10,000 per drone.referencesWelter calls an October 2023 no-drone-sales statement false. The attached page shows Grimes writing on 10 October at 3:40:36 pm EDT that it is his understanding there have been no actual drone sales yet. The prior 9 October message from Welter acknowledges receipt of the October payment and asks how many drones were sold. Neither the payment amount nor a definition of actual sales appears. The email page is marked 1 of 2; its second page is absent.
The contract refers to first payment under a drone-purchase contract; counsel’s later no-actual-sales understanding does not automatically resolve that defined trigger.
On Plaintiffs’ demand, Defendants must provide progress and payment information and relevant requested documents, subject to confidentiality and classified/restricted-information limits. Section 21 makes information due in ten calendar days, with a three-calendar-day cure provision. It also treats first-of-month nonreceipt as late. Actual demands, restrictions, responses and cure chronology must be examined to assess any breach.referencesWelter says Cyberlux assigned future government-contract receipts to Legalist in April 2024 and reconfirmed the assignment in July, without notice to plaintiffs, stockholders or the court. He calls this a diversion contrary to settlement disclosure obligations and describes Legalist as a factoring company, spelling its name Legalist SVP III. Those timing, breach and motive assertions cite Zablah and settlement materials not embedded here; the cited lender name is not silently treated as a separate entity from SPV III.
Welter alleges assignment without notice. The signed source requires updates and documents on demand, with restrictions and cure terms. Actual demands and responses are needed to test breach.
Exhibit A contains statement pages numbered 1 of 9 and 2 of 9 plus a generic reconciliation/consumer-notice reverse; other statement pages are not present. The embedded print shows positions 21–23 of a larger ninety-page export. The consumer-notice sixty-day language is generic boilerplate, not a live corporate dispute deadline. Visible print-path metadata and bank identifiers require separate disclosure review despite other redactions.supportsThe bank evidence directly supports the large dated credit and reconciled monthly balances. It does not supply the redacted recipients or the other statement pages needed to explain the monthly outflows.
Specifically named source propositions support the bounded distinction or question.
Visible earlier debits are $6,000 and $40 on 1 September, $8,000 on 5 September, $3,000 on 6 September and $750 on 7 September. The shown 8 September debits comprise $3,000,000, $575,000, $250,000, two $100,000 entries, $89,477.76, $85,768.25, two $50,000 entries, $25,000, $18,540.35, $10,500, two $10,000 entries, $6,500 and four $40 entries, totalling $4,380,946.36. Two $120 credits appear on 11 September. Descriptions are redacted, so payees and purposes cannot be assigned from these selected rows.supportsDoes Exhibit A identify the $3 million debit’s recipient?
Specifically named source propositions support the bounded distinction or question.
Welter calls an October 2023 no-drone-sales statement false. The attached page shows Grimes writing on 10 October at 3:40:36 pm EDT that it is his understanding there have been no actual drone sales yet. The prior 9 October message from Welter acknowledges receipt of the October payment and asks how many drones were sold. Neither the payment amount nor a definition of actual sales appears. The email page is marked 1 of 2; its second page is absent.supportsWhat contract and settlement definitions determine whether this receipt, later delivery or acceptance triggered the creditor’s payment entitlement?
Specifically named source propositions support the bounded distinction or question.
Visible earlier debits are $6,000 and $40 on 1 September, $8,000 on 5 September, $3,000 on 6 September and $750 on 7 September. The shown 8 September debits comprise $3,000,000, $575,000, $250,000, two $100,000 entries, $89,477.76, $85,768.25, two $50,000 entries, $25,000, $18,540.35, $10,500, two $10,000 entries, $6,500 and four $40 entries, totalling $4,380,946.36. Two $120 credits appear on 11 September. Descriptions are redacted, so payees and purposes cannot be assigned from these selected rows.supportsThe bank evidence directly supports the large dated credit and reconciled monthly balances. It does not supply the redacted recipients or the other statement pages needed to explain the monthly outflows.
Specifically named source propositions support the bounded distinction or question.
Welter calls an October 2023 no-drone-sales statement false. The attached page shows Grimes writing on 10 October at 3:40:36 pm EDT that it is his understanding there have been no actual drone sales yet. The prior 9 October message from Welter acknowledges receipt of the October payment and asks how many drones were sold. Neither the payment amount nor a definition of actual sales appears. The email page is marked 1 of 2; its second page is absent.supportsWhat complete email chain and October payment record explain the qualified no-actual-sales statement and acknowledged payment?
Specifically named source propositions support the bounded distinction or question.
Visible earlier debits are $6,000 and $40 on 1 September, $8,000 on 5 September, $3,000 on 6 September and $750 on 7 September. The shown 8 September debits comprise $3,000,000, $575,000, $250,000, two $100,000 entries, $89,477.76, $85,768.25, two $50,000 entries, $25,000, $18,540.35, $10,500, two $10,000 entries, $6,500 and four $40 entries, totalling $4,380,946.36. Two $120 credits appear on 11 September. Descriptions are redacted, so payees and purposes cannot be assigned from these selected rows.supportsWhich full statement and unredacted transaction records identify the recipients, purposes and authorisations for the $23,240,154.65 monthly debits?
Specifically named source propositions support the bounded distinction or question.
The September statement summary for Cyberlux’s account ending 6642 shows opening balance $20,087.01 on 1 September, ten deposits/credits totalling $38,701,840.13, no posted checks, 118 withdrawals/debits totalling $23,240,154.65, and closing balance $15,481,772.49 on 30 September. The displayed equation reconciles exactly: opening plus credits minus debits equals closing. The thirty-day statement period and one enclosed item are displayed.supportsThe bank evidence directly supports the large dated credit and reconciled monthly balances. It does not supply the redacted recipients or the other statement pages needed to explain the monthly outflows.
Specifically named source propositions support the bounded distinction or question.
The visible 8 September entry is ACH DEPOSIT, HII TECHNICAL SO followed by redaction, for $38,700,600.00. It is evidence of the bank-recorded account credit, not by itself identification of contract terms, units accepted, earned revenue, restricted use or judgment-payoff entitlement. The visible originator fragment is not expanded beyond what is shown.supportsThe bank evidence directly supports the large dated credit and reconciled monthly balances. It does not supply the redacted recipients or the other statement pages needed to explain the monthly outflows.
Specifically named source propositions support the bounded distinction or question.
Exhibit A contains statement pages numbered 1 of 9 and 2 of 9 plus a generic reconciliation/consumer-notice reverse; other statement pages are not present. The embedded print shows positions 21–23 of a larger ninety-page export. The consumer-notice sixty-day language is generic boilerplate, not a live corporate dispute deadline. Visible print-path metadata and bank identifiers require separate disclosure review despite other redactions.supportsWhich full statement and unredacted transaction records identify the recipients, purposes and authorisations for the $23,240,154.65 monthly debits?
Specifically named source propositions support the bounded distinction or question.
Exhibit A contains statement pages numbered 1 of 9 and 2 of 9 plus a generic reconciliation/consumer-notice reverse; other statement pages are not present. The embedded print shows positions 21–23 of a larger ninety-page export. The consumer-notice sixty-day language is generic boilerplate, not a live corporate dispute deadline. Visible print-path metadata and bank identifiers require separate disclosure review despite other redactions.supportsDoes Exhibit A identify the $3 million debit’s recipient?
Specifically named source propositions support the bounded distinction or question.
The September statement summary for Cyberlux’s account ending 6642 shows opening balance $20,087.01 on 1 September, ten deposits/credits totalling $38,701,840.13, no posted checks, 118 withdrawals/debits totalling $23,240,154.65, and closing balance $15,481,772.49 on 30 September. The displayed equation reconciles exactly: opening plus credits minus debits equals closing. The thirty-day statement period and one enclosed item are displayed.supportsWhich full statement and unredacted transaction records identify the recipients, purposes and authorisations for the $23,240,154.65 monthly debits?
Specifically named source propositions support the bounded distinction or question.
Welter alleges asset-sale attempts, dilatory Virginia suits filed 8 July 2024 and loss of judgment collateral, relying on separate Zablah and docket materials. He says he attended the 28 October Texas hearing telephonically and claims a false Virginia-stay statement misled the court into a thirty-day execution stay while discovery continued. This includes an express acknowledgement of the limited stay; his causal/motive account remains an allegation requiring the full transcript.supportsHow does the full hearing transcript treat counsel’s clarification and the judge’s basis for the limited stay?
Specifically named source propositions support the bounded distinction or question.
Welter says Cyberlux assigned future government-contract receipts to Legalist in April 2024 and reconfirmed the assignment in July, without notice to plaintiffs, stockholders or the court. He calls this a diversion contrary to settlement disclosure obligations and describes Legalist as a factoring company, spelling its name Legalist SVP III. Those timing, breach and motive assertions cite Zablah and settlement materials not embedded here; the cited lender name is not silently treated as a separate entity from SPV III.supportsWhat contract and settlement definitions determine whether this receipt, later delivery or acceptance triggered the creditor’s payment entitlement?
Specifically named source propositions support the bounded distinction or question.
Welter alleges the drone contract was terminated in May 2024 without disclosure despite repeated promises of imminent payment, depriving plaintiffs of revenue and raising payment concerns. The termination, promises, settlement terms and actual obligation to apply specific receipts require their own instruments; the source is not a ruling that every asserted breach or cause is proved.supportsWhat contract and settlement definitions determine whether this receipt, later delivery or acceptance triggered the creditor’s payment entitlement?
Specifically named source propositions support the bounded distinction or question.
Welter alleges the drone contract was terminated in May 2024 without disclosure despite repeated promises of imminent payment, depriving plaintiffs of revenue and raising payment concerns. The termination, promises, settlement terms and actual obligation to apply specific receipts require their own instruments; the source is not a ruling that every asserted breach or cause is proved.supportsThe bank receipt and Grimes’s qualified actual-sales statement create a question about the transaction definition and timing. Receipt alone does not determine whether a sale, delivery, acceptance or commission-trigger event had occurred, or whether counsel knowingly misstated it.
Specifically named source propositions support the bounded distinction or question.
The visible 8 September entry is ACH DEPOSIT, HII TECHNICAL SO followed by redaction, for $38,700,600.00. It is evidence of the bank-recorded account credit, not by itself identification of contract terms, units accepted, earned revenue, restricted use or judgment-payoff entitlement. The visible originator fragment is not expanded beyond what is shown.supportsWhat contract and settlement definitions determine whether this receipt, later delivery or acceptance triggered the creditor’s payment entitlement?
Specifically named source propositions support the bounded distinction or question.
Welter says TowneBank produced a September 2023 statement in discovery and describes a $38,700,600 receipt on 8 September from HII Technical as a wire that should have satisfied the judgment. The selected bank page instead labels the transaction ACH DEPOSIT. The amount/date are directly visible, while his transfer-type wording and entitlement conclusion retain their separate roles.supportsThe bank evidence directly supports the large dated credit and reconciled monthly balances. It does not supply the redacted recipients or the other statement pages needed to explain the monthly outflows.
Specifically named source propositions support the bounded distinction or question.
The visible 8 September entry is ACH DEPOSIT, HII TECHNICAL SO followed by redaction, for $38,700,600.00. It is evidence of the bank-recorded account credit, not by itself identification of contract terms, units accepted, earned revenue, restricted use or judgment-payoff entitlement. The visible originator fragment is not expanded beyond what is shown.supportsThe bank receipt and Grimes’s qualified actual-sales statement create a question about the transaction definition and timing. Receipt alone does not determine whether a sale, delivery, acceptance or commission-trigger event had occurred, or whether counsel knowingly misstated it.
Specifically named source propositions support the bounded distinction or question.
The two exhibits provide selected bank and email material rather than the full settlement, financing, termination or hearing record. Receipt of a large advance, actual sales, acceptance, cash withdrawals and legal entitlement to those funds are separate propositions. The affidavit’s broader conclusions do not erase those evidential boundaries.supportsThe bank receipt and Grimes’s qualified actual-sales statement create a question about the transaction definition and timing. Receipt alone does not determine whether a sale, delivery, acceptance or commission-trigger event had occurred, or whether counsel knowingly misstated it.
Specifically named source propositions support the bounded distinction or question.
Welter calls an October 2023 no-drone-sales statement false. The attached page shows Grimes writing on 10 October at 3:40:36 pm EDT that it is his understanding there have been no actual drone sales yet. The prior 9 October message from Welter acknowledges receipt of the October payment and asks how many drones were sold. Neither the payment amount nor a definition of actual sales appears. The email page is marked 1 of 2; its second page is absent.supportsThe bank receipt and Grimes’s qualified actual-sales statement create a question about the transaction definition and timing. Receipt alone does not determine whether a sale, delivery, acceptance or commission-trigger event had occurred, or whether counsel knowingly misstated it.
Specifically named source propositions support the bounded distinction or question.
WEIGH
Explained weighting
A score appears only when its components and change threshold are published.
No published WEIGH run
The active Website Edition contains no applied score snapshot for this source or its connected objects. That means not assessed—not zero.