SEC v. Anatoly Hurgin; Alexander Aurovsky; Ability Computer & Software Industries Ltd.; and Ability Inc., No. LR-24505, Southern District of New York (June 20, 2019) — Press Release

SEC Charges Intelligence Communications Company and Top Executives with Defrauding Merger Investors Litigation Release No. 24505 / June 20, 2019 Securities and Exchange Commission v. Anatoly Hurgin, Alexander Aurovsky, Ability Computer & Software Industries Ltd., and Ability Inc., No. 19-civ-05705 (SDNY), filed June 18, 2019 The SEC on Tuesday charged Ability Inc., an Israel-based intelligence communications company, its wholly-owned subsidiary, and two of its top executives with defrauding shareholders of a Florida-based special purpose acquisition company, or "SPAC," a company formed to raise capital for a merger or acquisition within a set timeframe. The SEC's complaint, filed in federal district court in Manhattan, alleges that Ability, CEO Anatoly Hurgin, and chief technology officer Alexander Vladimir Aurovsky, defrauded SPAC shareholders who voted in favor of a merger between Ability and the SPAC, Cambridge Capital Acquisition Corp., in December 2015. According to the complaint, if Cambridge had not consummated a merger by December 2015, it would have been required, without an extension of the SPAC term, to return all of the capital to its shareholders. To convince shareholders to vote in favor of the merger proposal, the defendants allegedly lied to SPAC shareholders about Ability's business prospects, including Ability's purported ownership of a new "game-changing" cellular interception product, ULIN, Ability's so-called backlog of orders from its largest customer, a police agency in Latin America, Ability's lack of actual purchase orders backing its backlog, and Ability's pipeline of possible future orders from customers. As alleged in the complaint, Ability and the two executives profited from the merger, with Ability receiving approximately $19 million, and Hurgin and Aurovsky each receiving approximately $9 million, plus $6 million each in put options, while Cambridge shareholders lost $60 million. The SEC's complaint charges defendants with violations of the antifraud and proxy statement provisions of the federal securities laws. Specifically, the complaint charges Ability and Hurgin with violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 14(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5 and 14a-9 thereunder, and Aurovsky with violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act and Section 14(a) of the Exchange Act and Rule 14a-9 thereunder. The SEC's complaint seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against the defendants, and also seeks an officer and director bar against Hurgin. The SEC's investigation was conducted by Jennifer T. Calabrese and supervised by Ansu N. Banerjee and John W. Berry. The litigation will be conducted by Donald Searles and supervised by Amy J. Longo of the Los Angeles Regional Office. For further information, see Release No. 33-10651 (June 20, 2019) SEC Complaint

SEC Charges Intelligence Communications Company and Top Executives with Defrauding Merger Investors Litigation Release No. 24505 / June 20, 2019 Securities and Exchange Commission v. Anatoly Hurgin, Alexander Aurovsky, Ability Computer & Software Industries Ltd., and Ability Inc., No. 19-civ-05705 (SDNY), filed June 18, 2019 The SEC on Tuesday charged Ability Inc., an Israel-based intelligence communications company, its wholly-owned subsidiary, and two of its top executives with defrauding shareholders of a Florida-based special purpose acquisition company, or "SPAC," a company formed to raise capital for a merger or acquisition within a set timeframe. The SEC's complaint, filed in federal district court in Manhattan, alleges that Ability, CEO Anatoly Hurgin, and chief technology officer Alexander Vladimir Aurovsky, defrauded SPAC shareholders who voted in favor of a merger between Ability and the SPAC, Cambridge Capital Acquisition Corp., in December 2015. According to the complaint, if Cambridge had not consummated a merger by December 2015, it would have been required, without an extension of the SPAC term, to return all of the capital to its shareholders. To convince shareholders to vote in favor of the merger proposal, the defendants allegedly lied to SPAC shareholders about Ability's business prospects, including Ability's purported ownership of a new "game-changing" cellular interception product, ULIN, Ability's so-called backlog of orders from its largest customer, a police agency in Latin America, Ability's lack of actual purchase orders backing its backlog, and Ability's pipeline of possible future orders from customers. As alleged in the complaint, Ability and the two executives profited from the merger, with Ability receiving approximately $19 million, and Hurgin and Aurovsky each receiving approximately $9 million, plus $6 million each in put options, while Cambridge shareholders lost $60 million. The SEC's complaint charges defendants with violations of the antifraud and proxy statement provisions of the federal securities laws. Specifically, the complaint charges Ability and Hurgin with violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 14(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5 and 14a-9 thereunder, and Aurovsky with violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act and Section 14(a) of the Exchange Act and Rule 14a-9 thereunder. The SEC's complaint seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against the defendants, and also seeks an officer and director bar against Hurgin. The SEC's investigation was conducted by Jennifer T. Calabrese and supervised by Ansu N. Banerjee and John W. Berry. The litigation will be conducted by Donald Searles and supervised by Amy J. Longo of the Los Angeles Regional Office. For further information, see Release No. 33-10651 (June 20, 2019) SEC Complaint