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SAFECARD CHIEF OPERATING OFFICER, GERALD CAHILL, NAMED AS CO-DEFENDANT WITH SAFECARD SERVICES, INC. IN TAX EVASION SUIT

 MIAMI, July 27 /PRNewswire/ -- Peter Halmos, co-founder and former chairman and chief executive officer of SafeCard Services, Inc., (NYSE: SSI) today announced that Halmos Trading & Investment Company ("Halmos Trading") has filed an amended complaint in Florida State Court charging Gerald Cahill, SafeCard's former chief financial officer and present chief operating officer, in addition to SafeCard with tax evasion. According to the suit, the purpose of SafeCard's and Cahill's actions as well as those of certain SafeCard professional advisors was to "frame" Halmos Trading and Peter Halmos for SafeCard's and Cahill's illegal and possibly criminal conduct.
 Peter Halmos and Halmos Trading will seek unspecified damages which Mr. Halmos believes will total approximately $40 million, including compensatory damages of at least $15 million in connection with SafeCard's and Cahill's illegal conduct with respect to the company's lease arrangements for its corporate headquarters in Ft. Lauderdale, Florida and approximately $25 million of damages in connection with SafeCard's and Cahill's actions.
 Specifically, the suit seeks redress against SafeCard and Cahill for their wrongful and tortious acts against Halmos Trading, a Florida partnership of which Peter Halmos is managing general partner. The suit charges SafeCard refused to honor its obligations under a lease agreement between it and Halmos Trading involving office space SafeCard leased as its corporate headquarters for six years in Ft. Lauderdale, Florida. In so doing, SafeCard and Cahill attempted in conjunction with others to defraud the State of Florida out of sales tax; to defraud Halmos Trading and Peter Halmos in connection with the lease termination agreement and to falsely pin the blame on Halmos Trading and Peter Halmos. Furthermore, the suit charges Gerald Cahill with tortious and unjustified interference with the contractual and business relationships of Halmos Trading and SafeCard.
 The amended complaint describes, among other things, a conspiracy undertaken by SafeCard, Cahill, Barry Tillis (SafeCard's in-house legal counsel) and June Gertig, (SafeCard's outside legal counsel). The complaint states, "In 1992, SafeCard determined to relocate its headquarters from Florida to Wyoming based, in part, on its desire to avoid payment of Florida taxes. At that time, SafeCard, along with Defendant Cahill, Tillis and June Gertig (a partner of Fried Frank Harris Shriver & Jacobson, SafeCard's general counsel), and others, began a conspiracy to harm Peter Halmos and Halmos Trading by maneuvering: (i) to break SafeCard's tax nexus to Florida, (ii) to evade payment of Florida taxes, (iii) to subject Halmos Trading to severe Florida tax liability, and (iv) to subject Peter Halmos and Halmos Trading to potential criminal sanctions."
 The complaint shows that when Halmos Trading's accountants questioned SafeCard in early 1992 about payment of the sales tax on the lease, Cahill told Halmos' attorney that "SafeCard doesn't want to look for new problems now in paying sales tax" but falsely promised that the sales tax would either be paid or that SafeCard would indemnify Halmos Trading for such sales tax. Furthermore, June Gertig, SafeCard's outside general counsel, also in the latter part of 1992 assured Halmos' legal counsel "not to worry about it".
 The complaint makes the point that, after the decision was made to move SafeCard's headquarters to Wyoming, the Defendants secretly conspired to evade payment of Florida sales taxes, thereby subjecting Halmos Trading and Peter Halmos to potential criminal and civil tax penalties. This conspiracy was to be accomplished by the Defendants attempting to trick Peter Halmos and Halmos Trading into releasing SafeCard from its obligation to pay past due and future sales tax on the Lease. The Defendants also conspired that in the event they were unable to trick Halmos Trading, SafeCard would simply breach its Lease of the 6400 Building, abandon the premises, repudiate its obligations under the Lease.
 The amended complaint states, "The management of SafeCard, in particular Cahill and Tillis, with the aid and participation of Gertig, affirmatively and intentionally kept concealed from Peter Halmos and Halmos Trading SafeCard's non-payment of sales tax on the Lease payments. Halmos and Halmos Trading believed that SafeCard's management was adhering to his order in November of 1989 that SafeCard honestly and accurately pay the sales tax of each non-tax exempt portion of Lease payments directly to the State. Indeed, SafeCard's management affirmatively, intentionally, and deceptively kept Halmos from knowing SafeCard's tax evasion. Peter Halmos did not discover SafeCard's non- payment of taxes until January, 1993, after his ouster from SafeCard."
 The complaint further notes, "On December 15, 1992, Peter Halmos was wrongfully forced out of any role at SafeCard. The actions of Cahill, Tillis and Gertig are motivated by personal ill-will toward Mr. Halmos."
 In April, Mr. Halmos announced that he had formed a new company, Privacy Protection Services, Inc., which will aim to be a major competitor in the marketing of services to both holders of credit cards and credit card companies. SafeCard's markets are similar.
 -0- 7/27/93
 /CONTACT: Robert D. Siegfried of Kekst and Company, 212-593-2655, for SafeCard Services, Inc./
 (SSI)


CO: SafeCard Services, Inc. ST: Florida IN: FIN SU:

LD -- NY094 -- 6451 07/27/93 17:08 EDT
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Date:Jul 27, 1993
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