Three years ago, Peter Halmos filed suit against American Express Co., saying it had filched marketing ideas from the credit card company he founded. He sought about $40 million in damages.
This month, Mr. Halmos enthusiastically announced a new business partnership with American Express, even paying for full-page advertisements about it in The New York Times and The Wall Street Journal.
The newfound amity between Mr. Halmos-whose reputation as a credit card innovator is eclipsed only by his habit of suing adversaries-has left many observers scratching their heads. The confusion stems not just from the sudden about-face, but from both sides' reluctance to discuss the nature of the alliance, or its possible relationship to the recent settlement reached in the litigation.
Mr. Halmos is founder and former chairman of SafeCard Services Inc., which pioneered the concept of credit card loss protection. Mr. Halmos started the company, with his brother Steven, in 1969 in his Fort Lauderdale, Fla., apartment, charging consumers a small fee to guard against unauthorized charges. The concept took off, and SafeCard prospered.
By the time Mr. Halmos parted ways with SafeCard in 1992, his relations with colleagues had frayed. Mr. Halmos, now 53, began filing lawsuits-more than a dozen-against people and institutions associated with the firm.
He alleged that SafeCard and its senior officers-who formed Ideon Group Inc. in 1995-were guilty of stock fraud, among other things. In 1995, he also sued American Express, which had worked with SafeCard on the credit card protection service from 1983 to 1992.
CUC International bought SafeCard Services in 1996, inheriting the litigation as part of the deal. Last year, in Mr. Halmos' biggest legal victory, he won $77.8 million from CUC, which is now known as Cendant Corp.
The settlement-plus Mr. Halmos' SafeCard fortunes-have helped him start a new product development and venture capital firm, Peter Halmos & Sons Inc. American Express' has invested an undisclosed amount.
The settlement "removed any obstacles" to the alliance, said American Express spokeswoman Emily Porter. But she would not specify why Amex is working with a former adversary, or what he would do for the company.
"The details of the strategic alliance are confidential," Ms. Porter said. When asked what American Express hopes to gain, Ms. Porter said Mr. Halmos "has developed products in the past that have been of interest to consumers."
In an interview, Mr. Halmos described his alliance with American Express as a "marketing pipeline" that could put new products on a "fast track" to consumers. His access to American Express' customers will help his firm attract entrepreneurial talent, he said.
His deep pockets are another asset. "We have many, many millions of dollars as a venture capital company, so we can become quite large," said Mr. Halmos, who is now based in West Palm Beach, Fla. "Who knows-we might invest in the next Microsoft."
The newspaper ads about the American Express alliance have prompted scores of entrepreneurs to contact Mr. Halmos about investing in their companies, he said.
Mr. Halmos is not limiting himself to products or services that would interest a financial services company. For instance, he said, he may make investments that reflect his long-standing interest in fish farming. In the 1970s, Mr. Halmos obtained patents in shrimp farming, and said he would consider investing in companies that raise aquatic foods. He said he long ago recognized that supplies of seafood were diminishing and that controlled environments were a major source of such food.
In this area, Mr. Halmos will certainly stay clear of his noncompete agreement with Cendant Corp. He is bound by their settlement for several years not to develop competing products or services.
Mr. Halmos has sued so many people that it is difficult to find many who will talk about him and allow their names to be used.
One who was willing, Peter Russ, a security analyst with Laidlaw & Co. who has followed SafeCard since 1990, called Mr. Halmos a "one-hit wonder."
Mr. Russ said, "To the best of my knowledge, no other product besides the credit card registry that he developed was anywhere near as successful, or profitable enough to continue."
Another analyst who requested anonymity said Mr. Halmos "has not been a force in marketing in the card industry for a while." He suggested American Express' investment in Halmos & Sons was a maneuver to settle the lawsuit.
Ms. Porter declined to comment on the issues analysts raised about Mr. Halmos or his litigious past.
She also said Anne Busquet, president of American Express Relationship Services, would not comment further. Ms. Busquet is quoted in the press release announcing the relationship with Mr. Halmos as saying that Amex "is pleased with this new alliance."
In an interview, Mr. Halmos said the speculation about his relationship with American Express was "sour grapes."
"There are two parties to the strategic alliance contract, Halmos & Sons and American Express, and anyone else doesn't know what they are talking about," he said.
Mr. Halmos was vague about describing the products his firm will develop, which do not necessarily pertain to credit cards. American Express has first rights to the products, and those that do not appeal to it will be offered to other companies.
Some product ideas will be born in-house, though others will come from companies in which Mr. Halmos invests. Right now, for example, Halmos & Sons is developing programs pertaining to publishing and job-hunting. "The credit card merely identifies a consumer," Mr. Halmos said.
Since his involvement with SafeCard, Mr. Halmos said he has started six private companies. One is in the music industry and another in publishing. He has owned an insurance company since 1989.
"I consider myself a start-up company entrepreneur," Mr. Halmos said. "I like to start something from scratch and make it successful."
In his spare time, Mr. Halmos said he also manages "a lot" of real estate holdings, sails his 158-foot sailboat, and invests his money in the stock market.
Mr. Halmos said his two teenage sons are involved in the new family business. Nicholas, 19, is in England at Oxford University, and will transfer to Brown University in the fall. Gregory, 14, is a high school student.
"As each of them is educated, they are concurrently involved in the activities" of Halmos & Sons, Mr. Halmos said.
Other company employees include an in-house lawyer, Robert Arnold, and three others whom Mr. Halmos has worked with for years.
While most industry insiders view Mr. Halmos' alliance with American Express quizzically, James B. Shanahan of Business Dynamics Consulting said it seemed to make sense.
"American Express is betting on a lot of different horses," said Mr. Shanahan, who is based in Newark, Del. "Putting $2 on this horse and that, all they need is a couple of winners. It is a diversification strategy. Every one they set up is another chance, another opportunity for something to happen."
