MARKETPLACE
The Wall Street Journal
By Joseph N. Boyce, Staff Reporter of The Wall Street Journal
September 16, 1996

Break-ins, shootings and drug dealing threatened to overwhelm the Township Apartments complex in Tampa, Fla., this spring. “Residents were scared to come home at night,” recalls Diana Perry, the assistant manager. “Parents wouldn’t let their kids outside.”

That was before the landlord struck back by hiring Critical Intervention Services, a small company that is bringing SWAT-team tactics to the private-security business.

Dressed all in black–from their spit-polished combat boots to bulletproof vests–the CIS officers now patrol the premises with .357 Magnum pistols, Mace and two-way radios. Neighborhood kids have dubbed them “Ninjas” and “Robocops.”

“We dress to intimidate the bad guys–we’re not here to play,” explains CIS’s 30-year-old founder and chief executive, K.C. Poulin.

Such a show of force would probably spur outcries in a suburb or office building. But CIS concentrates on a market underserved by both police and the private-security industry: low income, high-crime private housing developments. And there, most law-abiding residents welcome the Ninjas. “The trouble ended once they came,” says Ms. Perry of Township Apartments.

A close look at CIS offers a glimpse of the future. The $52 billion spent annually in the U.S. for private security outpaces the $30 billion public outlay for police, according to a 1990 study by a research arm of the U.S. Department of Justice. The study also projects that by the year 2000, public expenditures will rise to $44 billion, while those for private services are expected to double to $104 billion.

Along with growth have come big problems, including a high number of cases in which private guards have committed crimes. Ira. S. Somerson, chief executive of Loss Management Consultants, a Philadelphia company that advises business and government on security matters, notes that the average public policeman gets between 400 and 600 hours of preservice training at a certified academy, but private guards average between four and eight hours of training. “Far too many are underpaid, undertrained and psychologically unqualified,” Mr. Somerson Says.

CIS, however, stresses training. All CIS guards are certified by the state, and as such must complete 68 hours of training. The company requires them to take at least 80 hours of additional training annually. Their starting pay is $7 an hour—about $2 above the average. They get overtime pay plus medical, dental and life insurance and a 401(k) retirement plan.

Only 10% of CIS applicants pass a screening that includes psychological testing, and 70% of these wash out during a six-month probation. In an industry where the annual turnover is about 200%, most of CIS’s 40 permanent officers have been with the company at least two years.

In the more than 50 Florida apartment complexes patrolled by CIS, crime has dropped by an average of 50%, Mr. Poulin claims. Local police acknowledge that calls for their services drop in areas patrolled by CIS guards, but they can’t quantify the company’s impact on crime.

Nancy Montijo doesn’t need statistics. The 25-year-old resident of the Villages of Naranja apartments in Miami says that the complex was troubled by fights, loud music and “riffraff” visitors until CIS began patrolling there a few weeks ago. Friends had stopped visiting and “we stayed locked up in our apartment,” says Ms. Montijo, who is married and has two small children. With CIS, the pool has been reopened and things are now “completely quiet,” she says.

The Ninjas have limited arrest powers. Mainly, they turn up the heat: monitoring drug dealers’ movements, issuing trespass warnings to intruders and prodding landlords to issue eviction notices. Landlords who don’t cooperate risk termination of their CIS contract. “I’m not going to sent my guys into a combat zone without support from the client,” says Mr. Poulin, whose close-cropped haircut and athletic build reflect a career in private security that began at age 14 as an after-school police cadet.

As long as they confine themselves to private property, CIS teams in battle regalia don’t worry David Walchak, president of the International Association of Chiefs of Police. He says he would be concerned if they tried “to exercise that type of authority on the public streets.”

Besides maintaining a tough anticrime posture, CIS requires its officers to make a concerted effort to win the trust of those they guard, even playing ball with neighborhood kids or helping them with homework. “Once you get to know the kids and the parents, crime goes down,” Mr. Poulin says.

He recalls the time a nine-year-old boy whom his guards had befriended piped up the name of a suspect in a weapons complaint he was investigating. The boy’s mother, who had been afraid to identify the gunman, then corroborated the youngster’s account.

Maj. Robert DeLuna of the sheriff’s office in Tampa says CIS officers “not only come in and assist us, but they’re committed to the community. I never encountered that before.” He says his department handles 600,000 emergency calls annually and has yet to get a complaint about a CIS officer.

Barbara Jones, who works in the sheriff’s office and lives near some CIS-patrolled apartments, admits that the Ninjas initially intimidated her. “They looked like storm troopers,” she says. But she has been impressed by their rapport with the community, particularly young people. “It didn’t take me very long to see the difference they made,” she says.

Mr. Poulin made neighborhood outreach part of his officers’ job, because “We’d rather have kids look up to us than to the street dealer.” His guards distribute Christmas presents to needy youngsters, and this summer they passed out 3,000 replicas of their badges to “junior officers.” Now CIS considering awarding the badges for good school performance.

Since Mr. Poulin founded the company in 1991 with a $2,000 loan from his father, Alain, annual revenue has grown from $35,000 to an estimated $2 million this year, he says. To attract business, he initially set his fees low – under $9 an hour per guard. Over the past three years they have been raised to around $15 an hour, more in line with the competition and more reflective of his costs.

CIS officers employ sophisticated heat detectors, nigh-vision scopes, video cameras and sound boosters for surveillance. Their two-way radios cost $1,000 each, and the company recently spent $3,400 on a pair of dogs for its canine unit.

Today, CIS has more business than it can handle, some of it from developments where drug dealers have resettled after ejection from other CIS-protected properties. It has expanded beyond Tampa to properties in the Miami, Jacksonville and Orlando areas and is beefing up the executive-protection arm of the business. As CIS grows, Mr. Poulin worries about maintaining standards. “I’m not going to take a contract if I can’t find the right people” to service it, he insists.

CIS’s emphasis on quality control consigns it to remaining a “very small niche player” in the industry, says Mr. Somerson, of Loss Management Consultants. While he applauds Mr. Poulin’s strategy as effective, he adds: “What he is doing is really a social service rather than a law-enforcement service.”

That distinction doesn’t matter to Efthymios Kalyvas, owner of St. James Place, a 126-unit complex with 850 residents near Tampa. “It was the worst place in the neighborhood” before he hired the Ninjas several months ago, he says. Now, he adds, “trouble is down 95%.”