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He's Back
Then, they watched the new management proceed to fritter away much of the value of the business. After posting a first-ever annual loss in 1995, the board of directors agreed to sell the business to a competitor, CUC International, earlier this year. Today, older brother Peter, 53, who lives in Palm Beach, remains as combative as ever. He's embroiled in a batch of lawsuits with SafeCard, now known as Ideon Group, over his dismissal. Long wary of the press and resentful at being blamed for SafeCard's woes, Peter has his lawyer return a reporter's call, and he asks bluntly, "This isn't a hatchet job is it?"
But 48-year-old Steven Halmos is having something of a coming out party in Fort Lauderdale. Halmos exited SafeCard well fixed. He earned a $2.6 million annual compensation as CEO and he and his brother together sold in excess of $100 million worth of SafeCard stock in the mid-'80s. He left SafeCard in 1993 and that year sold $20 million worth of stock. He sold another 3.9 million shares for $16.50 apiece in 1994, grossing $64 million.
He has started a new company in the image of SafeCard, which he calls the Reunion Group reflecting that he has been joined in the venture by eight SafeCard alumni. He also has become a big player in the Fort Lauderdale real estate market, with a sizable interest in 13 1/2 acres of prime downtown property. Along with local real estate heavyweights Bill Horvitz and Terry Stiles [FT, August 1996], he is a partner in Las Olas Centre, a $40 million, 250,000-square-foot high-rise that will be the new home of H. Wayne Huizenga's Republic Industries.
Halmos, Horvitz and Stiles also own a 5 1/2-acre site across from Las Olas Centre, recently acquired for $9.4 million. The partners plan to renovate the property's two office buildings and build a multistory parking garage. In addition, Halmos is the largest investor in Brickell Station, a $50 million, 270,000-square-foot retail and entertainment project under development near the Broward Center for the Performing Arts.
In addition, he's become active in local philanthropy, chairing the fundraising Capital Campaign for Fort Lauderdale's Museum of Discovery and Science that raised $32 million.
These projects have brought Halmos a measure of attention that he once studiously avoided. "I've become a little more high-profile, not because I've sought it, but because I've done a few more things locally," he says.
That's an understatement. A few years ago, it would have been unusual to see Steve Halmos chairing a civic fundraising committee and downright shocking for him to meet with a reporter. After all, SafeCard was notorious for refusing to talk to stock analysts, financial writers and even its own stockholders. Twice the company held its annual stockholders meeting in Bismarck, North Dakota, and its headquarters was moved from Fort Lauderdale to Cheyenne, Wyoming, for a time.
Halmos, after playing the Garbo act for so many years, turns out to be an engaging, amiable fellow. From his 17th floor vantage point in Fort Lauderdale's New River Center, he walks a visitor from office to office, enthusiastically pointing out properties he and his partners hope to develop. "I believe in downtown Fort Lauderdale and believe it has a great future," he says.
In truth, Halmos seems to be taking some risks. Lewis Goodkin, president of Miami-based Goodkin Research Corp. and a contributing editor to Florida Trend, says the Urban Land Institute recently concluded that downtown Fort Lauderdale is one of the few areas in the country with a downtown office market strong enough to justify new construction.
But as for the Brickell Station project, Goodkin notes that another $50 million retail and entertainment center, Beach Place, will open soon on Fort Lauderdale Beach. He questions whether two similar centers can thrive in such close proximity. If Halmos' downtown real estate projects have raised his profile, his new company, Reunion Group, is his most intriguing new venture, in part because so many of its managers are veterans of SafeCard.
Three years ago, when Paul G. Kahn replaced Steven Halmos as SafeCard's chief executive, Kahn immediately fired most of the existing management team. That turned out to be foolish. With little knowledge of SafeCard's credit card enhancement business, Kahn spent millions of dollars on new ventures and ignored the core business. In 1992, the last year the Halmos brothers ran SafeCard, the company earned net income of $22.5 million on revenues of $146.3 million. Three years later, under Kahn, the renamed Ideon Group posted a $49.4 million net loss on revenues of $226.6 million. Kahn was fired earlier this year.
Meanwhile, Halmos kept in touch with his former managers. Eight of them, including former SafeCard president W.M. Stalcup and executive vice president of sales Joanne Seehousen, have joined in forming Reunion Group.
The company offers the same credit card registration and protection services as SafeCard. Already, Reunion Group has 100,000 subscribers who are paying about $15 a year to register their credit cards. If the cards are ever lost or stolen, the company sees that replacements are issued and indemnifies holders against improper use.
Over the years, the registration service has been criticized as something consumers can do easily for themselves by calling their credit card companies. But financial services industry consultant James L. Accomando says it's still a strong business. "That actually and surprisingly does very well," he says. "It is still a very popular business as crime statistics go up, as security issues come up and as privacy issues come up."
Further, Accomando believes Halmos is in perfect position to win back some of Ideon's customers. "What he's got going for him is Ideon has not been favorably positioned in the press and the SafeCard business was put on the back burner [while Kahn tried to develop other businesses]. What you've got is a major dishevelment going on in that category. It's a perfect opportunity for someone like Steve Halmos," says Accomando, who runs a Fairfield, Conn., consulting firm. Halmos predicts he'll have 250,000 subscribers within a year, which would give Reunion Group revenues of about $3.8 million. But Halmos is eyeing some new offerings, too. Reunion Group is testing a program in which it sells Motorola beepers through credit card companies. A solicitation to buy the beeper comes in one's credit card bill. If the customer signs up, the monthly pager fee is billed on the credit card. Halmos says initial response has been promising. Halmos says it stings to see a company he and his brother built over 25 years be so badly damaged that it must be bought up by a former rival. The brothers themselves are estranged, in part over the demise of SafeCard, and that hurts, too.
"We made 350 million bucks during the '80s. That's a lot of dough," Halmos says. "I look back on my SafeCard days with a lot of pride. Are there things I'd have done differently? Yeah, but who can't say that? I regret the way it ended, but I look back with a lot of pride on what we accomplished."
