SafeCard Sues Former Chairman
CHEYENNE, Wyo. (AP) _ SafeCard Services Inc. sued its former chairman Wednesday in federal court, alleging insider trading and misuse of corporate assets.
Peter Halmos, who co-founded the credit card protection company with his brother in 1969, denied the accusations and sued the company in state court in Chicago.
The moves were the latest in a dispute between Halmos and SafeCard, which notifies credit-card issuers about lost or stolen cards. Halmos was forced out as chairman in December in a dispute with outside directors.
Halmos said in December he was forced out after the board rejected his plan to help the company’s sagging stock price.
The dispute stemmed from Hamos’ role as a consultant and principal of a concern that had a management contract with SafeCard. Some board members had asked Halmos to step down amid litigation he filed on behalf of himself and the company.
SafeCard in October sued the Internal Revenue Services and some of its agents in federal court in Fort Lauderdale, Fla., alleging an unconstitutional search and seizure in 1988. The company dropped the lawsuit earlier this month.
SafeCard’s lawsuit filed Wednesday in federal court in Cheyenne accused Halmos of insider trading and other corporate misconduct that cost the company ″tens of millions of dollars.″ The lawsuit did not specify the amount of damages sought.
The company also filed counterclaims against Halmos in the state court in Fort Lauderdale in connection with abandoning a lease with a Halmos-related entity for SafeCard’s former corporate headquarters. SafeCard also said it was suing its former lawyer, Myron M. Cherry, and his Chicago firm.
Halmos in turn sued SafeCard and a director in state court in Chicago for actions related to his ouster. The lawsuit seeks more than $100 million in damages.
The company declined to comment on Halmos’ lawsuit. It said it had tried to negotiate a settlement with Halmos for more than five months.
″We believe we have done everything within reason and within our fiduciary responsibilities to stockholders to avoid lengthy and costly litigation,″ SafeCard president W.M. Stalcup Jr. said in a statement.
The company said it does not believe the litigation will affect operations.
SafeCard’s stock fell 37 1/2 cents to $11.87 1/2 on the New York Stock Exchange.
Halmos’ brother, Steven, who was chief executive of SafeCard, resigned in December. In April, he signed a consulting and non-compete agreement with SafeCard that will pay him $10 million over five years.