In re BENJAMIN H. GORDON

 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES ACT OF 1933 
Release No. 10651 / June 20, 2019 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 86164 / June 20, 2019 
 
INVESTMENT COMPANY ACT OF 1940 
Release No. 33514 / June 20, 2019 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-19210 
 
 
In the Matter of 
 
BENJAMIN H. GORDON  
 
Respondent. 
 
 
 
 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS, 
PURSUANT TO SECTION 8A OF THE 
SECURITIES ACT OF 1933, SECTIONS 15(b) 
AND 21C OF THE SECURITIES EXCHANGE 
ACT OF 1934, AND SECTION 9(b) OF THE 
INVESTMENT COMPANY ACT OF 1940, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER  
 
 
I. 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Sections 15(b) 
and 21C of the Securities Exchange Act of 1934 (“Exchange Act”), and Section 9(b) of the 
Investment Company Act of 1940 (“Investment Company Act”) against Benjamin H. Gordon 
(“Gordon” or “Respondent”).   
II. 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings  
herein, except as to the Commission’s jurisdiction over him and the subject matter of these 
proceedings, which are admitted, and except as provided herein in Section V, Respondent consents 
to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to  
Section 8A of the Securities Act of 1933, Sections 15(b) and 21C of the Securities Exchange Act 

 2 
of 1934, and Section 9(b) of the Investment Company Act of 1940, Making Findings, and 
Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below. 
III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
Summary 
1. These proceedings arise out of Cambridge Capital Acquisition Corp.’s 
(“Cambridge”) merger with Ability Computer & Software Industries, Ltd. (“Ability”) in December 
2015.  Respondent Gordon formed Cambridge in October 2013 as a “special purpose acquisition 
company,” or “SPAC,” for the purpose of finding and acquiring a target company.  Cambridge 
raised about $81 million in a public offering in December 2013.  These funds were held in trust to 
fund an acquisition of a target company.  Under the SPAC terms, Cambridge was required to return 
that capital if it did not close a merger with a target company by December 2015.  In June 2015, 
Cambridge identified Ability, an Israeli company that sells cellular interception technology to police 
and military agencies, as a potential SPAC target.  The proposed merger was presented to and 
approved by the Cambridge shareholders on December 22, 2015, and the merger closed the 
following day. 
2. Before the shareholder vote, Cambridge, Gordon, Ability, its CEO and co-founder, 
Anatoly Hurgin, and others held investor roadshows in September and November 2015 to convince 
the Cambridge shareholders and potential investors to vote in favor of the merger.  In early 
December 2015, Cambridge also provided shareholders with a final proxy statement soliciting their 
approval of the merger.  Cambridge publicly filed the proxy materials—the proxy statement and the 
roadshow materials—with the Commission in submissions signed by Gordon.  While Ability 
provided the information that was presented in the roadshow PowerPoint slides and in parts of the 
proxy statement that related to Ability, Gordon reviewed and approved these materials for filing. 
3. During the November 2015 roadshow, Ability told investors that it had a new “game 
changing” product called “ULIN,” and Hurgin claimed his company owned ULIN.  The proxy 
statement similarly referred to “[o]ur ULIN” product.  Unbeknownst to Gordon at the time, Ability 
did not own ULIN and was obligated to share half of any ULIN sales revenue with the real owner.  
The proxy materials also contained a revenue forecast, which the investors were told was achievable 
given Ability’s backlog of customer orders and its pipeline of possible future orders.  The proxy 
materials also touted Ability’s deal with a Latin American police agency, the company’s largest 
customer, as further proof of its ability to meet its forecasts.  However, the vast majority of Ability’s 
claimed backlog of customer orders was not backed by purchase orders, and were only verbal 
agreements with customers.  Moreover, most of the backlog of orders was with the Latin American 
police agency, through a third-party agent, and those orders were mainly oral agreements with 
police management who had been terminated.  None of this was disclosed to investors during the 
November 2015 roadshow or in the proxy statement.   
                                                 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding. 

 3 
4. Gordon did not exercise reasonable care in ensuring the accuracy of these proxy 
materials, which Cambridge filed with the Commission and which were provided to the Cambridge 
shareholders.  The proxy statement specifically stated that Cambridge had “conduct[ed] a thorough 
due diligence review” of Ability.  However, Gordon and his company had not conducted additional 
third-party due diligence on ULIN, its ownership, or the revised backlog and pipeline figure 
presented in the November 2015 roadshow.  Gordon also negligently failed to provide investors 
complete and accurate information about Ability’s backlog of orders and its prospects with its 
largest customer, the Latin American police agency. 
5. The December 2015 merger, once approved by the Cambridge shareholders, 
resulted in the formation of a new public company called Ability Inc., which trades on the Nasdaq 
Capital Market (symbol: ABIL).  Months after the merger was approved and consummated, Ability 
disclosed that it did not own ULIN and Ability reported a precipitous drop in revenue.   
Respondent 
6. Benjamin H. Gordon, age 45, was the CEO, secretary, treasurer, and a board 
member of Cambridge prior to the merger with Ability Inc.  After the merger, Gordon was an 
Ability Inc. board member until December 2016.  Gordon resides in Palm Beach, Florida.  Since 
2002 to the present, Gordon has been the owner and president of BG Strategic Advisors LLC 
(“BGSA”), a SEC-registered broker-dealer since 2003 (CRD #124448).  Since 2008 to the present, 
Gordon has held Series 7 and 24 licenses, and been a registered representative with BGSA (CRD 
#5622898). 
Related Entities and Individuals 
7. Cambridge Capital Acquisition Corp., incorporated in Delaware, was a West 
Palm Beach, Florida-based company that was formed for the purpose of acquiring a business.  
Cambridge, through a wholly-owned subsidiary, merged with Ability in December 2015.  After the 
merger, the surviving public company was renamed Ability Inc.  Prior to the merger, Cambridge’s 
common stock was registered with the Commission pursuant to Exchange Act Section 12(b), and 
traded on the Nasdaq Capital Market (symbol: CAMB). 
8. Ability Inc., incorporated in the Cayman Islands, is a Tel Aviv, Israel-based 
holding company that sells interception, decryption, cyber, and geolocation products related to cell 
phone and satellite communications through its wholly-owned subsidiary, Ability.  Its products are 
used by security and intelligence agencies, military forces, law enforcement, and homeland 
security agencies.  Ability Inc. is a foreign private issuer whose common stock is registered with 
the Commission pursuant to Exchange Act Section 12(b) and trades on the on the Nasdaq Capital 
Market (symbol: ABIL).  
9. Ability Computer & Software Industries, Ltd., prior to the merger with 
Cambridge in December 2015, was a private Tel Aviv, Israel-based company.  After the merger, 
Ability became Ability Inc.’s wholly-owned subsidiary.
 
 
 

 4 
10. Anatoly Hurgin, age 60, was Ability’s co-founder, co-owner, and CEO, and is 
Ability Inc.’s co-controlling shareholder, CEO, and chairman of the board.  Hurgin resides in 
Caesarea, Israel, holds no securities licenses, and has never been registered with the Commission 
in any capacity.  
11. Alexander Vladimir Aurovsky, age 66, was Ability’s co-founder, co-owner, and 
chief technology officer (“CTO”), and is Ability Inc.’s co-controlling shareholder, CTO, and a 
board member.  Aurovsky resides in Ramat Gan, Israel, holds no securities licenses, and has never 
been registered with the Commission in any capacity.  
Facts 
Formation of the SPAC, Cambridge 
12. Special purpose acquisition companies, or “SPACs,” are companies formed 
specifically to acquire a yet-to-be identified company.  SPACs usually raise capital for the 
acquisition through an initial public offering (“IPO”), and that capital is held in trust for a specific 
period of time, often 18 to 24 months.  SPACs typically offer the IPO investors some guaranteed 
payment for holding their capital during the trust period, as well as warrants for the stock of the 
company that is acquired.   
13. Gordon formed Cambridge as a SPAC in October 2013, and retained a third-party 
investment bank and underwriter for the IPO, which took place in December 2013.  Cambridge 
publicly traded on the Nasdaq Capital Market.  Cambridge raised approximately $81 million in the 
IPO, which was placed into a trust account to fund the acquisition of a target company.  Gordon 
invested money in the SPAC deal through equity investments and loans, and he ultimately opted to 
convert the loans into equity in lieu of a cash repayment. 
14. Under the terms of the SPAC IPO, if Cambridge did not consummate a business 
combination with another company within 24 months from the IPO, then the capital held in trust 
would be released back to the Cambridge shareholders, with 1% interest.  Also, after it was 
determined who the potential merger candidate would be, the merger would be presented to the 
Cambridge shareholders by proxy statement for a shareholder vote.  The Cambridge shareholders 
that voted in favor of the merger would become shareholders in the newly formed public company 
and receive warrants to purchase additional shares at a set price in the new public company.  
Cambridge shareholders who did not want to invest in the merger candidate could elect to redeem 
their shares, receiving warrants and a return of their original investment in the SPAC with a 1% 
profit. 
Ability Identified as an Acquisition Target 
15. Gordon and Cambridge needed to find and close a shareholder-approved merger 
with a target company by the 24-month deadline in December 2015, or Cambridge would have to 
return the $81 million in capital to the SPAC investors.   
16. In or around June 2015, a third-party underwriting firm working with Cambridge 
identified Ability as a potential acquisition target.  Ability was a Tel Aviv, Israel-based business 
that sold cell phone and satellite interception products.  It was co-founded and co-owned by two 

 5 
individuals, Hurgin and Aurovsky.  It primarily sold its products through resellers and agents who 
then sold the products to end-user government agencies. 
17. Prior to Cambridge and Ability executing a merger agreement in September 2015, 
Cambridge conducted due diligence on Ability.  To help in that process, Cambridge retained 
several professional firms to:  (i) provide guidance on how to package and market information to 
potential investors; (ii) produce a “quality of earnings” report that analyzed Ability’s revenues and 
expenses (the “Quality of Earnings Report”); (iii) study, among other things, Ability’s technology, 
products, industry and market potential; (iv) prepare a market research report; (v) conduct a 
background check on Ability’s principals, Hurgin and Aurovsky; and (vi) issue a fairness opinion 
that would be provided to the shareholders in connection with the vote to approve the merger (the 
“Fairness Opinion”).  Cambridge and their professionals relied on information provided by Ability 
in conducting this due diligence. 
18. Cambridge and Ability executed a merger agreement dated September 6, 2015.  
Under the terms of that agreement, if the merger was approved by the shareholders, Ability would 
receive about $19 million of the capital consideration being paid by Cambridge.  Hurgin and 
Aurovsky were to receive $9,075,000 each, and $11,850,000 was to be placed in an escrow 
account at an Israeli bank for their benefit, which they could access two years after the merger by 
tendering a set number of Ability shares. 
19. Although Gordon and Cambridge had raised $81 million in the SPAC IPO, 
Cambridge estimated that about $50 million would be necessary to close the Ability deal.  That 
capital would come from existing SPAC shareholders or new investors (in SPAC mergers, initial 
IPO investors sometimes redeem their investment, and retain only the warrants, rather than remain 
with the investment).  Therefore, Gordon, Hurgin, and Aurovsky needed to convince current 
shareholders or new investors with about $50 million invested in the SPAC to vote for the merger. 
Ability’s Initial Revenue Forecast, Backlog, and Pipeline 
20. In or about August 2015, Ability’s revenue forecast for FY 2016 was about $110 
million.  Two drivers of the forecast were the amount of customer orders Ability had in place—the 
“backlog”—and possible future orders for the coming period—the “pipeline.”  A key component 
of Ability’s backlog of customer orders was its arrangement with a Latin American police agency.  
This agency was Ability’s largest customer, accounting for 63% of Ability’s revenues in FY 2013, 
31% of its revenues in FY 2014, and 68% of its revenues for the first three quarters of FY 2015.  
About 80% of Ability’s backlog revenue for the last two quarters of 2015 and all of FY 2016 was 
from this one customer. 
21. In or about August 2015, Ability’s revenue forecast, backlog, and pipeline were 
provided to Cambridge and the two firms preparing the Fairness Opinion and the Quality of 
Earnings Report.  The Fairness Opinion incorrectly stated that Ability’s stated backlog of orders of 
$65.7 million was backed by signed purchase orders.  The Fairness Opinion stated that this was 
according to Ability management.  The Fairness Opinion was attached to the proxy statement that 
was filed with the Commission and provided to investors.  But the Quality of Earnings Report 
found that only 34% of the $65.7 million backlog was backed by purchase orders.  The Quality of 
Earnings Report, however, was not included with any of the proxy materials filed with the 

 6 
Commission or delivered to the shareholders voting on the merger.  The Quality of Earnings 
Report was issued on August 13, 2015 and all of the underlying information and data for the report 
was provided by Ability.  Similarly, the Fairness Opinion was issued on September 1, 2015 and 
made clear that it had relied on Ability’s management representations and had not conducted its 
own due diligence review.   
The Investor Roadshows 
22. In September and October 2015, Gordon, Cambridge, Hurgin, Ability, and others 
conducted a roadshow in the United States.  At the end of the roadshow, Cambridge had not yet 
raised the funds it needed to close the deal.  Among potential investors’ concerns were the 
reliability of Ability’s financial forecasts and Ability’s lack of recurring revenue.  In early 
November 2015, Gordon stated in an email that Cambridge had approximately 20 business days to 
raise $50 million from investors. 
23. In late November 2015 and early December 2015, Gordon, Cambridge, Hurgin, 
Ability, and others conducted a second roadshow.  As part of this roadshow, they presented a 
PowerPoint to prospective investors.  Ability provided the information presented in the PowerPoint 
that related to Ability, and Gordon reviewed and approved it for filing with the Commission.  
Cambridge filed copies of the PowerPoint and the transcript of the roadshow presentation with the 
Commission pursuant to Exchange Act Rule 14a-12 as additional proxy materials in November 
2015.  Gordon signed Forms 8-K that included the PowerPoint and the transcript.  
24. In the roadshow presentation, Hurgin told investors that Ability had developed its 
own interception product for mobile devices called Ultimate Interceptor or “ULIN.”  According to 
a transcript of the roadshow presentation, Hurgin touted ULIN as a “game changer” and that 
“today we are Ability the only owner for this technology.”  The roadshow PowerPoint similarly 
stated that ULIN was a “game changing” product that was “[d]eveloped in house,” that “[f]irst 
orders” were “expected in 1Q 2016,” and that ULIN was “based on a recurring revenue model.” 
25. In addition, the roadshow PowerPoint stated that Ability’s FY 2016 revenue 
forecast was $108 million.  In support of this revenue forecast, the PowerPoint included a $148 
million backlog and pipeline revenue figure, which was much higher than the amounts presented in 
the earlier roadshows.  This figure included $40 million in revenue from the projected sales of two 
ULIN products.  Hurgin told investors that the company estimated it would recognize about $100 
million in revenues for FY 2016 from this $148 million, based on the probability of securing the 
orders.  This $100 million approximately matched and supported Ability’s $108 million revenue 
forecast for FY 2016.   
26. Gordon emailed the November 2015 PowerPoint presentation to investors and 
highlighted in the body of his emails Ability’s $148 million backlog and pipeline figure and the 
new ULIN product.  He also sent internet links to the draft proxy statement filed with the 
Commission, and a video of Gordon and Hurgin presenting the PowerPoint slides at the roadshow.   

 7 
 
The Proxy Statement 
27. On December 2, 2015, the Form S-4 filed with the Commission, which included the 
proxy statement for the proposed merger (the “Proxy Statement”), was declared effective.  Gordon 
signed the Form S-4, and reviewed and approved the content of the attached and incorporated 
Proxy Statement.  The Fairness Opinion and the merger agreement between the companies were 
attached to the Proxy Statement.  Cambridge had supplied all information in the Proxy Statement 
that related to Cambridge, and Ability had supplied all information that related to Ability.  
28. The Proxy Statement stated that Cambridge conducted a “thorough due diligence 
review of Ability’s operations, which included reviewing Ability’s management, products, 
earnings and historical financial performance, new product development process and backlog, sales 
pipeline and backlog, market perception and reputation, financial controls and oversight and 
discussions with suppliers and customers.” 
29. The Proxy Statement contained several representations about ULIN and Ability’s 
forecasts and prospects.  In the “Business of Ability” section, the proxy stated that “[o]ur ULIN 
(Ultimate Interceptor) was introduced in November 2015.”  The “Estimates Furnished by Ability 
to Cambridge” section provided a FY 2016 forecast of $108 million in revenue.  Also, the MD&A 
section stated that the “significant increase in revenues” in the first three quarters of 2015 “was 
attributable to Ability’s increased focus on the Latin American market and completion of four large 
projects with a federal law enforcement agency in the region of which two projects ($8.1 million 
each) for fixed interception systems and two other projects of portable interception systems ($10.7 
million and $8.3 million).”  It further stated that “Ability believes future projects in this region are 
likely to continue.”   
The Misleading Proxy Materials 
30. The November 2015 roadshow materials and the Proxy Statement, which were 
publicly filed with the Commission in submissions signed by Gordon, contained misleading 
statements and omissions. 
31. These proxy materials were materially false and misleading with respect to their 
claims about the ULIN product.  Despite what these materials claimed or suggested, Ability did not 
own ULIN.  It was only a reseller of ULIN under an undisclosed reseller agreement with the real 
owner of the product.  Hurgin had not disclosed this reseller agreement to Cambridge and Gordon.  
Under the reseller agreement, Ability could only keep 50% of the revenues from ULIN sales.  In 
addition, if Ability failed to sell $10 million worth of ULIN in a given year, the owner was entitled 
to a 15% penalty on any shortfall.  There was no disclosure in any of the proxy materials that 
Ability did not own ULIN, that it sold the product through a reseller arrangement, or that the terms 
of that agreement required Ability to share its sales revenue with the ULIN owner.  Gordon did not 
become aware of this reseller agreement until May 2016, when it was publicly disclosed in Ability’s 
fiscal year 2015 Form 20-F. 
 

 8 
32. The $148 million backlog and pipeline revenue figure and the $108 million revenue 
forecast for FY 2016 in the proxy materials were also misleading.  These figures included sales of 
ULIN products without disclosing the reseller agreement or Ability’s obligation to share half of 
ULIN revenues.  The proxy materials also did not disclose that the pipeline and backlog revenue 
included about $22 million in backlog orders from the Latin American police agency and that they 
were based only on verbal agreements with police management who had been terminated.  Instead, 
the shareholders were provided with a Fairness Opinion, attached to the Proxy Statement, that 
stated that all of Ability’s backlog was backed by signed purchase orders.  The Quality of Earnings 
Report, which accurately found that the majority of the backlog had no purchase orders, was not 
provided to shareholders.  As a result, the backlog and pipeline figure and the revenue forecast 
were misleading.   
33. The proxy materials also contained materially misleading representations and 
omissions about Ability’s business with the Latin American police agency.  According to Ability, 
by the end of October 2015, over 80% of Ability’s backlog of orders for the remainder of 2015 and 
all of FY 2016 was from that agency.  Yet there were no purchase orders in place for over 70% of 
those orders; the orders were instead based on verbal agreements.  None of this was disclosed in 
the proxy materials.  Instead the November 2015 roadshow touted the prospects with the police 
agency and the Proxy Statement touted Ability’s “four large projects” with the “Latin American” 
“law enforcement agency,” and stated that Ability “believes future projects in this region are likely 
to continue.” 
34. In addition, the claim that Cambridge had conducted “thorough due diligence” was 
false and misleading.  The Proxy Statement did not disclose that Cambridge had not conducted 
additional third-party due diligence on ULIN, its ownership, or the $148 million backlog and 
pipeline figure that was presented in the November 2015 roadshow.   
Shareholder Approval of the Cambridge-Ability Merger 
35. The shareholder vote to approve the merger took place on December 22, 2015.  A 
majority of the Cambridge shareholders voted to approve the deal, and on December 23, 2015, the 
merger was consummated and Ability Inc. became the new surviving public company. 
36. After the merger closed, Ability Inc. had a significant decline in revenue and 
incurred net losses.  For example, for FY 2016, Ability Inc. only recognized about $16.5 million in 
revenues (as compared to $52 million in FY 2015), and had about $8.1 million in net losses.  For 
FY 2017, Ability Inc. recognized only about $3 million in revenues, and had about $9.1 million in 
net losses.  For the first through third quarters of 2018, Ability Inc. had only $437,000 in revenues, 
and incurred about $8 million in net losses.  Also, Ability never recognized as revenue the majority 
of the 2015 and 2016 backlog orders from the Latin American police agency.   
37. On May 2, 2016, approximately five months after the close of the Cambridge-
Ability merger, Ability Inc. filed its 2015 annual report with the Commission on Form 20-F.  This 
was the first time that Ability disclosed that it did not own ULIN and that it had a reseller 
arrangement with the product’s owner.  The 2015 annual report and accompanying press release 
were filed before the market opened on Monday, May 2, 2016.  Ability Inc.’s stock price dropped 
about 33% from the prior trading day. 

 9 
Gordon’s Negligent Conduct 
38. Gordon negligently failed to take reasonable steps to ensure that the Cambridge 
shareholders were provided with material and accurate information concerning Ability’s prospects.  
Cambridge represented in the Proxy Statement it had conducted “thorough due diligence” on 
Ability, including its products, backlog, and pipeline.  Cambridge and Gordon, however, did not 
disclose to investors that they had not conducted additional third-party diligence on ULIN, its 
ownership, or the backlog and pipeline revenue figure presented in the November 2015 roadshow.   
39. Gordon was aware of sufficient information that should have reasonably required 
him to make more fulsome disclosures to the shareholders about the lack of additional third-party 
due diligence on ULIN and the revised backlog and pipeline.  Although Ability never informed 
Gordon about the existence of the reseller agreement for ULIN, Hurgin told Gordon that Ability 
had “development partners” related to ULIN and that these partners had a small revenue share in 
any ULIN sales.  He was also aware of the Quality of Earnings Report and an Ability spreadsheet 
that showed that a substantial portion of Ability’s backlog was not backed by purchase orders.   
40. Also, by at least early November 2015—before the second roadshow and the proxy 
vote—Gordon had learned that managers at the Latin American police agency, who had orally 
agreed to purchase Ability’s products, had been terminated from their positions.  Gordon also 
knew that a significant amount of the backlog that had no purchase orders was with this Latin 
American police agency.  Gordon failed to take reasonable steps to ensure that these important 
facts were disclosed to all shareholders. 
Violations 
41. As a result of the conduct described above, Gordon willfully
2
 violated Section 
17(a)(2) of the Securities Act, which prohibits any person in the offer or sale of any securities from 
obtaining money or property by means of any untrue statement of a material fact or any omission to 
state a material fact necessary in order to make the statements made, in light of the circumstances 
under which they were made, not misleading. 
42. As a result of the conduct described above, Gordon willfully violated Section 14(a) 
of the Exchange Act and Rule 14a-9 thereunder, which prohibit making materially false or 
misleading statements or omissions in connection with the solicitation of a proxy. 
                                                 
2
  A willful violation of the securities laws means merely “‘that the person charged with the 
duty knows what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) 
(quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)).  There is no requirement 
that the actor “‘also be aware that he is violating one of the Rules or Acts.’” Id. (quoting 
Gearhart & Otis, Inc. v. SEC, 348 F.2d 798, 803 (D.C. Cir. 1965)). 

 10 
 
IV. 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent Gordon’s Offer. 
 Accordingly, pursuant to Section 8A of the Securities Act, Sections 15(b) and 21C of the 
Exchange Act, and Section 9(b) of the Investment Company Act, it is hereby ORDERED that: 
 A. Respondent Gordon shall cease and desist from committing or causing any 
violations and any future violations of Section 17(a)(2) of the Securities Act and Section 14(a) of 
the Exchange Act and Rule 14a-9 thereunder.   
 B. Respondent Gordon be, and hereby is suspended for a period of 12 months from 
association with any broker, dealer, investment adviser, municipal securities dealer, municipal 
advisor, transfer agent, or nationally recognized statistical rating organization; from serving or 
acting as an employee, officer, director, member of an advisory board, investment adviser or 
depositor of, or principal underwriter for, a registered investment company or affiliated person of 
such investment adviser, depositor, or principal underwriter; and from participating in any offering 
of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who 
engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any 
penny stock, or inducing or attempting to induce the purchase or sale of any penny stock, effective 
on the second Monday following the entry of this Order. 
C. Respondent Gordon shall, within 14 days of the entry of this Order, pay a civil 
money penalty in the amount of $100,000 to the Securities and Exchange Commission.  The 
Commission will hold funds paid pursuant to this paragraph in an account at the United States 
Treasury pending a decision in a related district court action against Ability Inc., Ability Computer 
& Software Industries, Ltd., Anatoly Hurgin, and Alexander Vladimir Aurovsky to establish a fair 
fund pursuant to 15 U.S. C. § 7246, Section 308(a) of the Sarbanes-Oxley Act of 2002, so that any 
disgorgement, prejudgment interest, and civil money penalties may be distributed to harmed 
investors.  If the fair fund is established in the related district court action, the Commission will 
transfer the funds collected herein to the district court to be added to the fair fund for distribution as 
ordered by that court.  If the court in the related district court action does not establish a fair fund, 
the civil money penalties paid herein will be transferred to the general fund of the United States 
Treasury, subject to Exchange Act Section 21F(g)(3).  If timely payment is not made, additional 
interest shall accrue pursuant to 31 U.S.C. §3717.   
   
Payment must be made in one of the following ways:   
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 11 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
Payments by check or money order must be accompanied by a cover letter identifying 
Benjamin H. Gordon as a Respondent in these proceedings, and the file number of these 
proceedings; a copy of the cover letter and check or money order must be sent to Michele W. 
Layne, Regional Director, Division of Enforcement, Securities and Exchange Commission, 444 
South Flower Street, Suite 900, Los Angeles, California, 90071.   
 D.  Regardless of whether the Commission in its discretion orders the creation of a 
Fair Fund for the penalties ordered in this proceeding, amounts ordered to be paid as civil money 
penalties pursuant to this Order shall be treated as penalties paid to the government for all 
purposes, including all tax purposes.  To preserve the deterrent effect of the civil penalty, 
Respondent agrees that in any Related Investor Action, he shall not argue that he is entitled to, nor 
shall he benefit by, offset or reduction of any award of compensatory damages by the amount of 
any part of Respondent’s payment of a civil penalty in this action (“Penalty Offset”).  If the court 
in any Related Investor Action grants such a Penalty Offset, Respondent agrees that he shall, 
within 30 days after entry of a final order granting the Penalty Offset, notify the Commission’s 
counsel in this action and pay the amount of the Penalty Offset to the Securities and Exchange 
Commission.  Such a payment shall not be deemed an additional civil penalty and shall not be 
deemed to change the amount of the civil penalty imposed in this proceeding.  For purposes of this 
paragraph, a “Related Investor Action” means a private damages action brought against 
Respondent by or on behalf of one or more investors based on substantially the same facts as 
alleged in the Order instituted by the Commission in this proceeding. 
V. 
It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 
523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 
Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 
amounts due by Respondent under this Order or any other judgment, order, consent order, decree 
or settlement agreement entered in connection with this proceeding, is a debt for the violation by 
Respondent of the federal securities laws or any regulation or order issued under such laws, as set 
forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19). 
 By the Commission. 
        
 
       Vanessa A. Countryman 
       Acting Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES ACT OF 1933 

Release No. 10651 / June 20, 2019 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 86164 / June 20, 2019 

 

INVESTMENT COMPANY ACT OF 1940 

Release No. 33514 / June 20, 2019 
 

ADMINISTRATIVE PROCEEDING 

File No. 3-19210 

 

 

In the Matter of 

 

BENJAMIN H. GORDON  

 

Respondent. 

 

 

 

 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS, 

PURSUANT TO SECTION 8A OF THE 

SECURITIES ACT OF 1933, SECTIONS 15(b) 

AND 21C OF THE SECURITIES EXCHANGE 

ACT OF 1934, AND SECTION 9(b) OF THE 

INVESTMENT COMPANY ACT OF 1940, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER  

 

 

I. 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Sections 15(b) 

and 21C of the Securities Exchange Act of 1934 (“Exchange Act”), and Section 9(b) of the 

Investment Company Act of 1940 (“Investment Company Act”) against Benjamin H. Gordon 

(“Gordon” or “Respondent”).   

II. 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings  

herein, except as to the Commission’s jurisdiction over him and the subject matter of these 

proceedings, which are admitted, and except as provided herein in Section V, Respondent consents 

to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to  

Section 8A of the Securities Act of 1933, Sections 15(b) and 21C of the Securities Exchange Act 



 2 

of 1934, and Section 9(b) of the Investment Company Act of 1940, Making Findings, and 

Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below. 

III. 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

Summary 

1. These proceedings arise out of Cambridge Capital Acquisition Corp.’s 

(“Cambridge”) merger with Ability Computer & Software Industries, Ltd. (“Ability”) in December 

2015.  Respondent Gordon formed Cambridge in October 2013 as a “special purpose acquisition 

company,” or “SPAC,” for the purpose of finding and acquiring a target company.  Cambridge 

raised about $81 million in a public offering in December 2013.  These funds were held in trust to 

fund an acquisition of a target company.  Under the SPAC terms, Cambridge was required to return 

that capital if it did not close a merger with a target company by December 2015.  In June 2015, 

Cambridge identified Ability, an Israeli company that sells cellular interception technology to police 

and military agencies, as a potential SPAC target.  The proposed merger was presented to and 

approved by the Cambridge shareholders on December 22, 2015, and the merger closed the 

following day. 

2. Before the shareholder vote, Cambridge, Gordon, Ability, its CEO and co-founder, 

Anatoly Hurgin, and others held investor roadshows in September and November 2015 to convince 

the Cambridge shareholders and potential investors to vote in favor of the merger.  In early 

December 2015, Cambridge also provided shareholders with a final proxy statement soliciting their 

approval of the merger.  Cambridge publicly filed the proxy materials—the proxy statement and the 

roadshow materials—with the Commission in submissions signed by Gordon.  While Ability 

provided the information that was presented in the roadshow PowerPoint slides and in parts of the 

proxy statement that related to Ability, Gordon reviewed and approved these materials for filing. 

3. During the November 2015 roadshow, Ability told investors that it had a new “game 

changing” product called “ULIN,” and Hurgin claimed his company owned ULIN.  The proxy 

statement similarly referred to “[o]ur ULIN” product.  Unbeknownst to Gordon at the time, Ability 

did not own ULIN and was obligated to share half of any ULIN sales revenue with the real owner.  

The proxy materials also contained a revenue forecast, which the investors were told was achievable 

given Ability’s backlog of customer orders and its pipeline of possible future orders.  The proxy 

materials also touted Ability’s deal with a Latin American police agency, the company’s largest 

customer, as further proof of its ability to meet its forecasts.  However, the vast majority of Ability’s 

claimed backlog of customer orders was not backed by purchase orders, and were only verbal 

agreements with customers.  Moreover, most of the backlog of orders was with the Latin American 

police agency, through a third-party agent, and those orders were mainly oral agreements with 

police management who had been terminated.  None of this was disclosed to investors during the 

November 2015 roadshow or in the proxy statement.   

                                                 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 



 3 

4. Gordon did not exercise reasonable care in ensuring the accuracy of these proxy 

materials, which Cambridge filed with the Commission and which were provided to the Cambridge 

shareholders.  The proxy statement specifically stated that Cambridge had “conduct[ed] a thorough 

due diligence review” of Ability.  However, Gordon and his company had not conducted additional 

third-party due diligence on ULIN, its ownership, or the revised backlog and pipeline figure 

presented in the November 2015 roadshow.  Gordon also negligently failed to provide investors 

complete and accurate information about Ability’s backlog of orders and its prospects with its 

largest customer, the Latin American police agency. 

5. The December 2015 merger, once approved by the Cambridge shareholders, 

resulted in the formation of a new public company called Ability Inc., which trades on the Nasdaq 

Capital Market (symbol: ABIL).  Months after the merger was approved and consummated, Ability 

disclosed that it did not own ULIN and Ability reported a precipitous drop in revenue.   

Respondent 

6. Benjamin H. Gordon, age 45, was the CEO, secretary, treasurer, and a board 

member of Cambridge prior to the merger with Ability Inc.  After the merger, Gordon was an 

Ability Inc. board member until December 2016.  Gordon resides in Palm Beach, Florida.  Since 

2002 to the present, Gordon has been the owner and president of BG Strategic Advisors LLC 

(“BGSA”), a SEC-registered broker-dealer since 2003 (CRD #124448).  Since 2008 to the present, 

Gordon has held Series 7 and 24 licenses, and been a registered representative with BGSA (CRD 

#5622898). 

Related Entities and Individuals 

7. Cambridge Capital Acquisition Corp., incorporated in Delaware, was a West 

Palm Beach, Florida-based company that was formed for the purpose of acquiring a business.  

Cambridge, through a wholly-owned subsidiary, merged with Ability in December 2015.  After the 

merger, the surviving public company was renamed Ability Inc.  Prior to the merger, Cambridge’s 

common stock was registered with the Commission pursuant to Exchange Act Section 12(b), and 

traded on the Nasdaq Capital Market (symbol: CAMB). 

8. Ability Inc., incorporated in the Cayman Islands, is a Tel Aviv, Israel-based 

holding company that sells interception, decryption, cyber, and geolocation products related to cell 

phone and satellite communications through its wholly-owned subsidiary, Ability.  Its products are 

used by security and intelligence agencies, military forces, law enforcement, and homeland 

security agencies.  Ability Inc. is a foreign private issuer whose common stock is registered with 

the Commission pursuant to Exchange Act Section 12(b) and trades on the on the Nasdaq Capital 

Market (symbol: ABIL).  

9. Ability Computer & Software Industries, Ltd., prior to the merger with 

Cambridge in December 2015, was a private Tel Aviv, Israel-based company.  After the merger, 

Ability became Ability Inc.’s wholly-owned subsidiary.  

 



 4 

10. Anatoly Hurgin, age 60, was Ability’s co-founder, co-owner, and CEO, and is 

Ability Inc.’s co-controlling shareholder, CEO, and chairman of the board.  Hurgin resides in 

Caesarea, Israel, holds no securities licenses, and has never been registered with the Commission 

in any capacity.  

11. Alexander Vladimir Aurovsky, age 66, was Ability’s co-founder, co-owner, and 

chief technology officer (“CTO”), and is Ability Inc.’s co-controlling shareholder, CTO, and a 

board member.  Aurovsky resides in Ramat Gan, Israel, holds no securities licenses, and has never 

been registered with the Commission in any capacity.  

Facts 

Formation of the SPAC, Cambridge 

12. Special purpose acquisition companies, or “SPACs,” are companies formed 

specifically to acquire a yet-to-be identified company.  SPACs usually raise capital for the 

acquisition through an initial public offering (“IPO”), and that capital is held in trust for a specific 

period of time, often 18 to 24 months.  SPACs typically offer the IPO investors some guaranteed 

payment for holding their capital during the trust period, as well as warrants for the stock of the 

company that is acquired.   

13. Gordon formed Cambridge as a SPAC in October 2013, and retained a third-party 

investment bank and underwriter for the IPO, which took place in December 2013.  Cambridge 

publicly traded on the Nasdaq Capital Market.  Cambridge raised approximately $81 million in the 

IPO, which was placed into a trust account to fund the acquisition of a target company.  Gordon 

invested money in the SPAC deal through equity investments and loans, and he ultimately opted to 

convert the loans into equity in lieu of a cash repayment. 

14. Under the terms of the SPAC IPO, if Cambridge did not consummate a business 

combination with another company within 24 months from the IPO, then the capital held in trust 

would be released back to the Cambridge shareholders, with 1% interest.  Also, after it was 

determined who the potential merger candidate would be, the merger would be presented to the 

Cambridge shareholders by proxy statement for a shareholder vote.  The Cambridge shareholders 

that voted in favor of the merger would become shareholders in the newly formed public company 

and receive warrants to purchase additional shares at a set price in the new public company.  

Cambridge shareholders who did not want to invest in the merger candidate could elect to redeem 

their shares, receiving warrants and a return of their original investment in the SPAC with a 1% 

profit. 

Ability Identified as an Acquisition Target 

15. Gordon and Cambridge needed to find and close a shareholder-approved merger 

with a target company by the 24-month deadline in December 2015, or Cambridge would have to 

return the $81 million in capital to the SPAC investors.   

16. In or around June 2015, a third-party underwriting firm working with Cambridge 

identified Ability as a potential acquisition target.  Ability was a Tel Aviv, Israel-based business 

that sold cell phone and satellite interception products.  It was co-founded and co-owned by two 



 5 

individuals, Hurgin and Aurovsky.  It primarily sold its products through resellers and agents who 

then sold the products to end-user government agencies. 

17. Prior to Cambridge and Ability executing a merger agreement in September 2015, 

Cambridge conducted due diligence on Ability.  To help in that process, Cambridge retained 

several professional firms to:  (i) provide guidance on how to package and market information to 

potential investors; (ii) produce a “quality of earnings” report that analyzed Ability’s revenues and 

expenses (the “Quality of Earnings Report”); (iii) study, among other things, Ability’s technology, 

products, industry and market potential; (iv) prepare a market research report; (v) conduct a 

background check on Ability’s principals, Hurgin and Aurovsky; and (vi) issue a fairness opinion 

that would be provided to the shareholders in connection with the vote to approve the merger (the 

“Fairness Opinion”).  Cambridge and their professionals relied on information provided by Ability 

in conducting this due diligence. 

18. Cambridge and Ability executed a merger agreement dated September 6, 2015.  

Under the terms of that agreement, if the merger was approved by the shareholders, Ability would 

receive about $19 million of the capital consideration being paid by Cambridge.  Hurgin and 

Aurovsky were to receive $9,075,000 each, and $11,850,000 was to be placed in an escrow 

account at an Israeli bank for their benefit, which they could access two years after the merger by 

tendering a set number of Ability shares. 

19. Although Gordon and Cambridge had raised $81 million in the SPAC IPO, 

Cambridge estimated that about $50 million would be necessary to close the Ability deal.  That 

capital would come from existing SPAC shareholders or new investors (in SPAC mergers, initial 

IPO investors sometimes redeem their investment, and retain only the warrants, rather than remain 

with the investment).  Therefore, Gordon, Hurgin, and Aurovsky needed to convince current 

shareholders or new investors with about $50 million invested in the SPAC to vote for the merger. 

Ability’s Initial Revenue Forecast, Backlog, and Pipeline 

20. In or about August 2015, Ability’s revenue forecast for FY 2016 was about $110 

million.  Two drivers of the forecast were the amount of customer orders Ability had in place—the 

“backlog”—and possible future orders for the coming period—the “pipeline.”  A key component 

of Ability’s backlog of customer orders was its arrangement with a Latin American police agency.  

This agency was Ability’s largest customer, accounting for 63% of Ability’s revenues in FY 2013, 

31% of its revenues in FY 2014, and 68% of its revenues for the first three quarters of FY 2015.  

About 80% of Ability’s backlog revenue for the last two quarters of 2015 and all of FY 2016 was 

from this one customer. 

21. In or about August 2015, Ability’s revenue forecast, backlog, and pipeline were 

provided to Cambridge and the two firms preparing the Fairness Opinion and the Quality of 

Earnings Report.  The Fairness Opinion incorrectly stated that Ability’s stated backlog of orders of 

$65.7 million was backed by signed purchase orders.  The Fairness Opinion stated that this was 

according to Ability management.  The Fairness Opinion was attached to the proxy statement that 

was filed with the Commission and provided to investors.  But the Quality of Earnings Report 

found that only 34% of the $65.7 million backlog was backed by purchase orders.  The Quality of 

Earnings Report, however, was not included with any of the proxy materials filed with the 



 6 

Commission or delivered to the shareholders voting on the merger.  The Quality of Earnings 

Report was issued on August 13, 2015 and all of the underlying information and data for the report 

was provided by Ability.  Similarly, the Fairness Opinion was issued on September 1, 2015 and 

made clear that it had relied on Ability’s management representations and had not conducted its 

own due diligence review.   

The Investor Roadshows 

22. In September and October 2015, Gordon, Cambridge, Hurgin, Ability, and others 

conducted a roadshow in the United States.  At the end of the roadshow, Cambridge had not yet 

raised the funds it needed to close the deal.  Among potential investors’ concerns were the 

reliability of Ability’s financial forecasts and Ability’s lack of recurring revenue.  In early 

November 2015, Gordon stated in an email that Cambridge had approximately 20 business days to 

raise $50 million from investors. 

23. In late November 2015 and early December 2015, Gordon, Cambridge, Hurgin, 

Ability, and others conducted a second roadshow.  As part of this roadshow, they presented a 

PowerPoint to prospective investors.  Ability provided the information presented in the PowerPoint 

that related to Ability, and Gordon reviewed and approved it for filing with the Commission.  

Cambridge filed copies of the PowerPoint and the transcript of the roadshow presentation with the 

Commission pursuant to Exchange Act Rule 14a-12 as additional proxy materials in November 

2015.  Gordon signed Forms 8-K that included the PowerPoint and the transcript.  

24. In the roadshow presentation, Hurgin told investors that Ability had developed its 

own interception product for mobile devices called Ultimate Interceptor or “ULIN.”  According to 

a transcript of the roadshow presentation, Hurgin touted ULIN as a “game changer” and that 

“today we are Ability the only owner for this technology.”  The roadshow PowerPoint similarly 

stated that ULIN was a “game changing” product that was “[d]eveloped in house,” that “[f]irst 

orders” were “expected in 1Q 2016,” and that ULIN was “based on a recurring revenue model.” 

25. In addition, the roadshow PowerPoint stated that Ability’s FY 2016 revenue 

forecast was $108 million.  In support of this revenue forecast, the PowerPoint included a $148 

million backlog and pipeline revenue figure, which was much higher than the amounts presented in 

the earlier roadshows.  This figure included $40 million in revenue from the projected sales of two 

ULIN products.  Hurgin told investors that the company estimated it would recognize about $100 

million in revenues for FY 2016 from this $148 million, based on the probability of securing the 

orders.  This $100 million approximately matched and supported Ability’s $108 million revenue 

forecast for FY 2016.   

26. Gordon emailed the November 2015 PowerPoint presentation to investors and 

highlighted in the body of his emails Ability’s $148 million backlog and pipeline figure and the 

new ULIN product.  He also sent internet links to the draft proxy statement filed with the 

Commission, and a video of Gordon and Hurgin presenting the PowerPoint slides at the roadshow.   



 7 

 

The Proxy Statement 

27. On December 2, 2015, the Form S-4 filed with the Commission, which included the 

proxy statement for the proposed merger (the “Proxy Statement”), was declared effective.  Gordon 

signed the Form S-4, and reviewed and approved the content of the attached and incorporated 

Proxy Statement.  The Fairness Opinion and the merger agreement between the companies were 

attached to the Proxy Statement.  Cambridge had supplied all information in the Proxy Statement 

that related to Cambridge, and Ability had supplied all information that related to Ability.  

28. The Proxy Statement stated that Cambridge conducted a “thorough due diligence 

review of Ability’s operations, which included reviewing Ability’s management, products, 

earnings and historical financial performance, new product development process and backlog, sales 

pipeline and backlog, market perception and reputation, financial controls and oversight and 

discussions with suppliers and customers.” 

29. The Proxy Statement contained several representations about ULIN and Ability’s 

forecasts and prospects.  In the “Business of Ability” section, the proxy stated that “[o]ur ULIN 

(Ultimate Interceptor) was introduced in November 2015.”  The “Estimates Furnished by Ability 

to Cambridge” section provided a FY 2016 forecast of $108 million in revenue.  Also, the MD&A 

section stated that the “significant increase in revenues” in the first three quarters of 2015 “was 

attributable to Ability’s increased focus on the Latin American market and completion of four large 

projects with a federal law enforcement agency in the region of which two projects ($8.1 million 

each) for fixed interception systems and two other projects of portable interception systems ($10.7 

million and $8.3 million).”  It further stated that “Ability believes future projects in this region are 

likely to continue.”   

The Misleading Proxy Materials 

30. The November 2015 roadshow materials and the Proxy Statement, which were 

publicly filed with the Commission in submissions signed by Gordon, contained misleading 

statements and omissions. 

31. These proxy materials were materially false and misleading with respect to their 

claims about the ULIN product.  Despite what these materials claimed or suggested, Ability did not 

own ULIN.  It was only a reseller of ULIN under an undisclosed reseller agreement with the real 

owner of the product.  Hurgin had not disclosed this reseller agreement to Cambridge and Gordon.  

Under the reseller agreement, Ability could only keep 50% of the revenues from ULIN sales.  In 

addition, if Ability failed to sell $10 million worth of ULIN in a given year, the owner was entitled 

to a 15% penalty on any shortfall.  There was no disclosure in any of the proxy materials that 

Ability did not own ULIN, that it sold the product through a reseller arrangement, or that the terms 

of that agreement required Ability to share its sales revenue with the ULIN owner.  Gordon did not 

become aware of this reseller agreement until May 2016, when it was publicly disclosed in Ability’s 

fiscal year 2015 Form 20-F. 

 



 8 

32. The $148 million backlog and pipeline revenue figure and the $108 million revenue 

forecast for FY 2016 in the proxy materials were also misleading.  These figures included sales of 

ULIN products without disclosing the reseller agreement or Ability’s obligation to share half of 

ULIN revenues.  The proxy materials also did not disclose that the pipeline and backlog revenue 

included about $22 million in backlog orders from the Latin American police agency and that they 

were based only on verbal agreements with police management who had been terminated.  Instead, 

the shareholders were provided with a Fairness Opinion, attached to the Proxy Statement, that 

stated that all of Ability’s backlog was backed by signed purchase orders.  The Quality of Earnings 

Report, which accurately found that the majority of the backlog had no purchase orders, was not 

provided to shareholders.  As a result, the backlog and pipeline figure and the revenue forecast 

were misleading.   

33. The proxy materials also contained materially misleading representations and 

omissions about Ability’s business with the Latin American police agency.  According to Ability, 

by the end of October 2015, over 80% of Ability’s backlog of orders for the remainder of 2015 and 

all of FY 2016 was from that agency.  Yet there were no purchase orders in place for over 70% of 

those orders; the orders were instead based on verbal agreements.  None of this was disclosed in 

the proxy materials.  Instead the November 2015 roadshow touted the prospects with the police 

agency and the Proxy Statement touted Ability’s “four large projects” with the “Latin American” 

“law enforcement agency,” and stated that Ability “believes future projects in this region are likely 

to continue.” 

34. In addition, the claim that Cambridge had conducted “thorough due diligence” was 

false and misleading.  The Proxy Statement did not disclose that Cambridge had not conducted 

additional third-party due diligence on ULIN, its ownership, or the $148 million backlog and 

pipeline figure that was presented in the November 2015 roadshow.   

Shareholder Approval of the Cambridge-Ability Merger 

35. The shareholder vote to approve the merger took place on December 22, 2015.  A 

majority of the Cambridge shareholders voted to approve the deal, and on December 23, 2015, the 

merger was consummated and Ability Inc. became the new surviving public company. 

36. After the merger closed, Ability Inc. had a significant decline in revenue and 

incurred net losses.  For example, for FY 2016, Ability Inc. only recognized about $16.5 million in 

revenues (as compared to $52 million in FY 2015), and had about $8.1 million in net losses.  For 

FY 2017, Ability Inc. recognized only about $3 million in revenues, and had about $9.1 million in 

net losses.  For the first through third quarters of 2018, Ability Inc. had only $437,000 in revenues, 

and incurred about $8 million in net losses.  Also, Ability never recognized as revenue the majority 

of the 2015 and 2016 backlog orders from the Latin American police agency.   

37. On May 2, 2016, approximately five months after the close of the Cambridge-

Ability merger, Ability Inc. filed its 2015 annual report with the Commission on Form 20-F.  This 

was the first time that Ability disclosed that it did not own ULIN and that it had a reseller 

arrangement with the product’s owner.  The 2015 annual report and accompanying press release 

were filed before the market opened on Monday, May 2, 2016.  Ability Inc.’s stock price dropped 

about 33% from the prior trading day. 



 9 

Gordon’s Negligent Conduct 

38. Gordon negligently failed to take reasonable steps to ensure that the Cambridge 

shareholders were provided with material and accurate information concerning Ability’s prospects.  

Cambridge represented in the Proxy Statement it had conducted “thorough due diligence” on 

Ability, including its products, backlog, and pipeline.  Cambridge and Gordon, however, did not 

disclose to investors that they had not conducted additional third-party diligence on ULIN, its 

ownership, or the backlog and pipeline revenue figure presented in the November 2015 roadshow.   

39. Gordon was aware of sufficient information that should have reasonably required 

him to make more fulsome disclosures to the shareholders about the lack of additional third-party 

due diligence on ULIN and the revised backlog and pipeline.  Although Ability never informed 

Gordon about the existence of the reseller agreement for ULIN, Hurgin told Gordon that Ability 

had “development partners” related to ULIN and that these partners had a small revenue share in 

any ULIN sales.  He was also aware of the Quality of Earnings Report and an Ability spreadsheet 

that showed that a substantial portion of Ability’s backlog was not backed by purchase orders.   

40. Also, by at least early November 2015—before the second roadshow and the proxy 

vote—Gordon had learned that managers at the Latin American police agency, who had orally 

agreed to purchase Ability’s products, had been terminated from their positions.  Gordon also 

knew that a significant amount of the backlog that had no purchase orders was with this Latin 

American police agency.  Gordon failed to take reasonable steps to ensure that these important 

facts were disclosed to all shareholders. 

Violations 

41. As a result of the conduct described above, Gordon willfully2 violated Section 

17(a)(2) of the Securities Act, which prohibits any person in the offer or sale of any securities from 

obtaining money or property by means of any untrue statement of a material fact or any omission to 

state a material fact necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading. 

42. As a result of the conduct described above, Gordon willfully violated Section 14(a) 

of the Exchange Act and Rule 14a-9 thereunder, which prohibit making materially false or 

misleading statements or omissions in connection with the solicitation of a proxy. 

                                                 
2  A willful violation of the securities laws means merely “‘that the person charged with the 

duty knows what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) 

(quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)).  There is no requirement 

that the actor “‘also be aware that he is violating one of the Rules or Acts.’” Id. (quoting 

Gearhart & Otis, Inc. v. SEC, 348 F.2d 798, 803 (D.C. Cir. 1965)). 



 10 

 

IV. 

 In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondent Gordon’s Offer. 

 Accordingly, pursuant to Section 8A of the Securities Act, Sections 15(b) and 21C of the 

Exchange Act, and Section 9(b) of the Investment Company Act, it is hereby ORDERED that: 

 A. Respondent Gordon shall cease and desist from committing or causing any 

violations and any future violations of Section 17(a)(2) of the Securities Act and Section 14(a) of 

the Exchange Act and Rule 14a-9 thereunder.   

 B. Respondent Gordon be, and hereby is suspended for a period of 12 months from 

association with any broker, dealer, investment adviser, municipal securities dealer, municipal 

advisor, transfer agent, or nationally recognized statistical rating organization; from serving or 

acting as an employee, officer, director, member of an advisory board, investment adviser or 

depositor of, or principal underwriter for, a registered investment company or affiliated person of 

such investment adviser, depositor, or principal underwriter; and from participating in any offering 

of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who 

engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any 

penny stock, or inducing or attempting to induce the purchase or sale of any penny stock, effective 

on the second Monday following the entry of this Order. 

C. Respondent Gordon shall, within 14 days of the entry of this Order, pay a civil 

money penalty in the amount of $100,000 to the Securities and Exchange Commission.  The 

Commission will hold funds paid pursuant to this paragraph in an account at the United States 

Treasury pending a decision in a related district court action against Ability Inc., Ability Computer 

& Software Industries, Ltd., Anatoly Hurgin, and Alexander Vladimir Aurovsky to establish a fair 

fund pursuant to 15 U.S. C. § 7246, Section 308(a) of the Sarbanes-Oxley Act of 2002, so that any 

disgorgement, prejudgment interest, and civil money penalties may be distributed to harmed 

investors.  If the fair fund is established in the related district court action, the Commission will 

transfer the funds collected herein to the district court to be added to the fair fund for distribution as 

ordered by that court.  If the court in the related district court action does not establish a fair fund, 

the civil money penalties paid herein will be transferred to the general fund of the United States 

Treasury, subject to Exchange Act Section 21F(g)(3).  If timely payment is not made, additional 

interest shall accrue pursuant to 31 U.S.C. §3717.   

   

Payment must be made in one of the following ways:   

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

http://www.sec.gov/about/offices/ofm.htm


 11 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

Payments by check or money order must be accompanied by a cover letter identifying 

Benjamin H. Gordon as a Respondent in these proceedings, and the file number of these 

proceedings; a copy of the cover letter and check or money order must be sent to Michele W. 

Layne, Regional Director, Division of Enforcement, Securities and Exchange Commission, 444 

South Flower Street, Suite 900, Los Angeles, California, 90071.   

 D.  Regardless of whether the Commission in its discretion orders the creation of a 

Fair Fund for the penalties ordered in this proceeding, amounts ordered to be paid as civil money 

penalties pursuant to this Order shall be treated as penalties paid to the government for all 

purposes, including all tax purposes.  To preserve the deterrent effect of the civil penalty, 

Respondent agrees that in any Related Investor Action, he shall not argue that he is entitled to, nor 

shall he benefit by, offset or reduction of any award of compensatory damages by the amount of 

any part of Respondent’s payment of a civil penalty in this action (“Penalty Offset”).  If the court 

in any Related Investor Action grants such a Penalty Offset, Respondent agrees that he shall, 

within 30 days after entry of a final order granting the Penalty Offset, notify the Commission’s 

counsel in this action and pay the amount of the Penalty Offset to the Securities and Exchange 

Commission.  Such a payment shall not be deemed an additional civil penalty and shall not be 

deemed to change the amount of the civil penalty imposed in this proceeding.  For purposes of this 

paragraph, a “Related Investor Action” means a private damages action brought against 

Respondent by or on behalf of one or more investors based on substantially the same facts as 

alleged in the Order instituted by the Commission in this proceeding. 

V. 

It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 

523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 

Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 

amounts due by Respondent under this Order or any other judgment, order, consent order, decree 

or settlement agreement entered in connection with this proceeding, is a debt for the violation by 

Respondent of the federal securities laws or any regulation or order issued under such laws, as set 

forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19). 

 By the Commission. 

        

 

       Vanessa A. Countryman 

       Acting Secretary