Telit CEO Oozi Cats allegedly Uzi Katz wanted for fraud

Oozi cats

Oozi Cats has stepped down until the matter is sorted out.

In an announcement today to the AIM Stock Exchange, Israeli technology company Telit Communications plc (AIM:TCM) stated, "Telit… notes speculation regarding historical indictments in the United States of America of Telit's Chief Executive Officer, Oozi Cats, in respect of matters which are unrelated to Telit and significantly pre-date its establishment." The company added, "The Board of Telit has appointed independent solicitors to conduct a thorough review of this matter. Pending the outcome of this review, the Board has agreed to Cats's request for a leave of absence from the company. Telit finance director and president Yosi Fait will serve as interim CEO during this time."

Telit added no more particulars. The company concluded its brief announcement by saying, "Further updates will be made as soon as possible." Telit's share price responded to the announcement by plummeting 33.3%, thereby continuing its volatility in trading over the past two days (the share price plunged 41.5% two days ago after the publication of poor financial results, followed by a 21.5% correction yesterday). The company's market cap was cut in half over the past three days, reaching £150 million (NIS 700 million).

Indictment in Massachusetts in 1992

The company provided no particulars, and no response from suspended CEO Oozi Cats was available, but Tom Winnifrith published a report on shareprophets.com, an information website for investors that publishes reports by independent journalists, likely to shed light on the affair.

Winnifrith wrote that Cats and his wife, Ruth, left the US in 1991-1992 when they were wanted on charges of fraud. Winnifrith attached an indictment filed at the Massachusetts District Court in 1992 to his article. According to the indictment, the Cats couple and another person obtained money and property through fraud.

According to the indictment, Cats offered properties for sale and organized a deal in which the third conspirator bought the property at the market price as a straw man. The property was immediately sold to Ruth Cats at an especially high price. With the help of others, the Cats couple obtained a mortgage, while the information given in order to obtain the mortgage is suspected of being false, including changing the price of the acquisition, Ruth Cats's income, information about her occupation, the amount invested in the property, and information about her bank deposits.

Furthermore, according to the report on shareprophets.com, Ruth Cats filled out forms in which she falsely declared that she was a US citizen. According to Winnifrith, the Cats couple "fled from the US, and never saw the inside of a courthouse," and Cats was declared a fugitive. The legal document spells the name "Uzi Katz," while Telit spells the name of its suspended CEO "Oozi Cats."

Telit lost money for the past six months

Telit is active in the machine to machine (M2M) market, supplying goods and services used for communications between electronic devices in various markets, including Internet of Things (IoT), for example. It is interesting to note that even though an indictment was allegedly filed against its CEO in the US, Telit is also listed over the counter in the US on the Pink Sheets, for which the regulatory requirements are the most lenient.

On Tuesday, Telit published poor financial results for the first half of 2017. While revenue was up 6.9% to $178 million, the company posted operating and net losses. Its operating loss was $4.8 million, compared with a $6.4 million operating profit in the first half of last year, and its net loss was $4.1 million, compared with a $4 million net profit in the first half of 2016. Adjusted EBITDA plunged 31.2% to $14.7 million.

A delay in obtaining permission to market products using LTE technology in the US had a negative impact on Telit's results. According to Telit's guidance, it expects revenue to total $400-430 million in 2017, 8-16% more than in 2016, with $47-60 million in adjusted EBITDA – between 14% less and 10% more than in 2016. Telit also said that it expects revenue to grow more than 15% in 2018.

The big loser from the 41.5% plunge in the Telit share on Tuesday was Cats, the value of whose holdings fell £17.4 million to £24.5 million. Cats, however, took advantage of the drop in price to acquire more shares. According to a report published yesterday, Cats bought 400,000 Telit shares for £688,000, paying £1.84 per share for half of the shares and £1.60 per share for the other half (for the sake of comparison, Telit's share was traded today at £1.25). Cats now owns 12.9% of Telit's share capital, making him the largest shareholder in the company.

Published by Globes [online], Israel Business News - www.globes-online.com - on August 10, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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