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Yigal Adato Easy Cash Community Pawn Center San Diego, CA Phone: (619) 280-7296 [email protected]

Larry Anapolsky California Loan & Jewelry Sacramento, CA Phone: (916) 446-6175 [email protected]

Art Artinian All Season Pacoima, CA Phone: (818) 896-4366 [email protected]

Sergey Biryukov Alvarado Pawn & Jewelry Los Angeles, CA Phone: (213) 413-4440 [email protected]

Doug Brown Highland Park Pawnbrokers Los Angeles, CA Phone: (323) 254-2834 [email protected]

Richard Cohn Reed’s Diamond Company Los Angeles, CA Phone: (323) 262-9127 [email protected]

Steve Diamond Diamond Jewelry & Loan Santa Maria, CA Phone: (805) 349-0839 [email protected]

Michael Elliott North American Metals Van Nuys, CA Phone: (800) 773-1626 [email protected]

Stephen Foster Fresno Coin Gallery Jewelry & LoanFresno, CA Phone: (559) 222-2646 [email protected]

Dave Goglio Big Ben Loan Office San Jose, CA Phone: (408) 294-3143 [email protected]

Robert Goldstone, Treasurer Emeritus Danville, CA Phone: (925) 820-3140 [email protected]

Michael Hyman Pawn Advantage Store Santa Rosa, CA Phone: (707) 527-7296 [email protected]

Dwight Kelly Super Xpress Pawn Riverside, CA Phone: (951) 785-5610 [email protected]

Stan Lukowicz, III Capital City Loan Sacrmaneto, CA Phone: (916) 334-7296 [email protected]

Jacob Notowitz Numis international, Inc. Millbrae, CA Phone: (650) 697-6570 [email protected]

Jan SchneiderR & J Jewelry & Loan San Jose, CA Phone: (408) 295-3610 [email protected]

Barry Smith BG Loan & Jewelry Co. Bell Gardens, CA Phone: (562) 927-7296 [email protected]

Jordan Tabach-Bank Beverly Loan Company 9440 Santa Monica Blvd., # 301 Beverly Hills, CA 90210 Phone: (310) 275-2555

Seth Ward Union Life and Casualty Insurance Phoenix, AZ Phone: (800) 545-5624 [email protected]

Officers

Diane Taylor President Trader’s Loan & Jewelry Reseda, CA Phone: (818) 345-8696 [email protected]

Robert Verhoeff Immediate Past President Best Collateral, Inc. Novato, CA Phone: (415) 883-5020 x 106 [email protected]

Tony DeMarco First Vice President Western Loan & Jewelry Los Angeles, CA Phone: (323) 268-4120 [email protected]

Israel Adato Second Vice President Express Financial Services San Diego, CA Phone: (619) 428-8003 [email protected]

Mike Robinson Secretary Crown Jewelry & Loan San Diego, CA Phone: (619) 284-7243 [email protected]

Michael Herda Treasurer Atlas Loan & Jewelry Bellflower, CA Phone: 562-263-7296 [email protected]

StaffKimberly Andosca Executive DirectorCLSDAP.O. Box 1826 Valley Springs, CA 95252 Phone: (209) 786-5115 Fax: (209) 786-5114 [email protected]

Copyright ©2010 CLSDA

Opinions expressed in these articles are

those of the individual authors and do not

necessarily represent the views of CLSDA.

ContentsA Message from the CLSDA President . . . . . . . . . . . . . . . . . . . 7

Capitol Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Legislative Committee Update . . . . . . . . . . . . . . . . . . . . . . . . .10

Mack’s Marketing Corner . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Legal Corner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Executive Director’s Message . . . . . . . . . . . . . . . . . . . . . . . . . .21

Attention! Your Business Practices May Need Adjustment! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

CLSD Foundation – 2010 Donation Project Gets Underway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Congratulations California Loan and Jewelry – 100 Years! . . . . . . . . . . . . . . . . . . . . . . . . 26

GOLD BUYING – The Unlicensed Challenge . . . . . . . . . . . . 28

Directors

6 Collateral loan & secondhand dealers association of California

50104-UL&C MagAD 8x10.5.indd 1 6/15/07 12:47:02 PM

spring 2010 7

A Message from the CLSDA President

50104-UL&C MagAD 8x10.5.indd 1 6/15/07 12:47:02 PM

The quality of leadership, more than any other single factor, determines the success or failure of an organization.

Since 1956, CLSDA has relied on the commitment of its volunteer Board of Directors to pave the way for others through their leadership and com-mitment. These volunteer leaders provide our industry with great busi-ness knowledge, insight and direc-tion to build a brighter tomorrow.

Now we’re looking to elect mem-bers to CLSDA’s Board.

If you believe you can offer the kind

of leadership that will move our industry forward, or if you know of a CLSDA member (regular or as-sociate) whom you would like to nominate for a Board position, please contact Kim at the CLSDA office 209-786-5115 no later than July 16, 2010 for an official nomination form.

Thank you,

Jacob Notowitz, Election Committee Chair Numis International, Inc. [email protected] 650-697-6570

Calendar of Events

• April 22 - Inland Empire Meeting. Kountry Folks, Riverside 7 p.m.• April 26 - CLSDA Board of Directors Meeting. South Coast Winery Resort

& Spa, Temecula. 8 a.m. - 5 p.m. (Members Welcome!)• October 22-24, 2010 – CLSDA 54th Annual Convention and Exhibition,

Universal City Hilton

2010 Board of Directors Election

I hope everyone is having a good start to this new year. There is a lot going on!We are continuing to moni-

tor the proposed federal legis-lation in Washington, DC. At this time the pawn industry has been exempted from the House version of the “Consum-er Financial Protection Agency (CFPA) bill”. We are now wait-ing on developments that the Senate is working on in their version of the CFPA bill.

We are also looking to see if the 36% APR Bill starts to move. CLSDA and the NPA are working together to continually protect our industry from any potential legislation that could effect the way we do business. On March 8th the NPA is having their yearly Legislative conference in Washington, DC. We will have the opportunity to meet with representatives to tell them our story. We must educate all poli-ticians as to our importance to their constituents in the commu-nities we serve.

CLSDA is working hard for you to get the state-wide and uni-form downloading system, that became law back in 2000, funded and operational. This system will stop the threat of a “per-ticket fee”. Jan Schneider, CLSDA Leg-islative Chair, explains in more detail about the course of events we have gone through over the past ten years to make this hap-pen on page 10.

One of our top priorities is trying to find a way to get law enforcement to actually enforce the laws as they pertain to un-licensed gold buyers. There are currently laws on the books that prohibit non-licensed people from buying secondhand items from the public. However, there does not seem to be enough in-terest by law enforcement to go after these people. We are work-ing with Bill Duplissea, our CLS-

DA Lobbyist, to come up with tougher legislation that will en-tice law enforcement to go after these people.

Our other top priority is to work on creating a piece of legis-lation that will protect pawnbro-kers when an interest payment is taken from a customer through the mail and a new signature is not obtained. It is very impor-tant to get signatures from your customers when a new loan is created, re-written, or redeemed. A statement with-in your contract may also be a pos-sible solution to this. We recom-mend that all pawnbrokers who take payments without obtaining a signature contact your own at-torney to discuss your options.

This will be a busy year! I hope everyone has a prosperous 2010!

Diane Taylor President CLSDA ■


By Bill Duplissea

As February becomes March, little is being done on the major issues facing

California. This is not the case for issues concerning CLSDA.

Our SCR 63 (Yee) now has 40 plus co-authors and will be heard soon in Senate Business and Professions Committee. In short, our friends have re-sponded enthusiastically to our request for help on the reporting issue. The Attorney General has been in contact with Congress-man Adam Schiff’s office in DC, and the ball is rolling to acquire stimulus money for the uniform statewide data base. CAPOA and California Police Chiefs Associa-tion have adopted support posi-tions for SCR 63.

With President Diane Taylor, Sam Shocket and Tony DeMarco I toured five stores in the Los Angeles area. The illegal and un-licensed trade in gold appears to be at epidemic proportion. It is a delicate balance to determine what statutory changes must be made to curb the illegal gold trade without harming our mem-ber’s business models.

The global view of the condi-tion of the State is less optimistic. For many months now I have in-

dicated to our members that the paralysis of leadership here in Sacramento creates a very dan-gerous prospect for California. As of today, little if anything is being done or even seriously dis-cussed to deal with the $20B plus problem that remains. The State is due to run out of cash about

mid-May. The State Treasurer has cancelled the latest round of bond sales. Our check book is empty, the credit cards are maxed out, and our creditors are knocking on the door, and no-body seems to care, but you can help...get out and VOTE during the next state-wide election! ■

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Capitol Update

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Jan Schneider, CLSDA Legislative Chair

“Going Rogue”….. Do We Really Want To Go There?

A growing majority of the com-ments on the e-group have to do with illegal gold buyers

and the unfair competition that they cause our industry. In most cases, they are unlicensed, do not require ID, do not fill out the re-quired JUS 123, do not report and do not hold. They have proliferated with the rise in gold prices, and in most cases local law enforcement agencies are either unable or un-willing to go after these business-es. We are losing a lot of business and we are frustrated and angry. What’s a pawnbroker to do?

A lot of us are at the “If you can’t beat ‘em, join ‘em” point, but is “going rogue” really in the best interest of the long term goals and objectives of our industry?

We have been fighting the battle for over ten years to level the playing field, kill the pawn tax, raise our image and be rec-ognized as part of the fiber of the business communities in which we operate our shops. As gold continues to hover over $1,000 per ounce, the urgency intensifies to get rid of the bad players that are stealing our business.

A little history lesson;It started in the late ‘90s when

a group of us were invited to par-ticipate in a workshop at the of-fices of the Los Angeles County Sheriff. The workshop was to look at how reporting might work for a statewide and uniform electronic database. The bill that would put this database into law was SB 1520 (Schiff). SB 1520 became law in 2000. There was just one problem… there was no funding mechanism to build the database!

As the threat of a pawn tax (per ticket fee) gathered momen-

tum, CLSDA looked for a solution to kill it forever. The logical weap-on appeared to be the statewide and uniform database. How could our local jurisdictions charge us for reporting if we were required to do so by law, they (the police) did not have to deal with paper, they could access all of our transac-tions through the database and ev-ery secondhand dealer in the state had to report through the data-base? Not only would the pawn tax threat go away, but this would go a long way towards leveling the play-ing field and taking the target off of our backs. Now everyone would finally see that there are thousands of other businesses that deal in sec-ondhand tangible personal proper-ty, not just pawnshops.

In 2003 we ran SB 1893 (Bur-ton) on the premise that if all of the businesses that are supposed to be licensed and report complied, with the money from the license fees from all of these businesses the database could be built. The indus-tries that were not reporting joined forces and killed the bill.

We attempted to get it done again in 2005 with AB 1178 (Yee), and then a pared-down version we called AB 1178 Lite. This time around we managed to awaken the sleeping giant, Ebay. They were not happy about the prospect of their sellers having to report, although that was not what would have oc-curred. Regardless, they were suc-cessful at killing our legislation and keeping the database from be-coming a reality yet again.

Over the next two legislative sessions we stepped away from the database and worked on some rev-enue generating bills. We were suc-cessful in getting rate increases for our members, addressed evolving technology as it relates to IDs and made it legal to accept the Matric-ula Consular as ID for secondhand transactions. We also killed some bills that would have had negative impacts for the pawn industry.

While we were working all of these other issues, we never lost sight of our core goal, kill the pawn tax and level the playing field. Build a statewide and uniform database to which ALL businesses that deal in secondhand tangible personal property transactions would be re-quired to download their data.

Well folks, that day has come. Through all of the work that we have done, the friends that we have made, and the guidance of our lobbyist we have the perfect confluence of events and circum-stances to finally have the data-base built, along with the funds to give local law enforcement agencies the ability to enforce compliance. SCR 63 (Yee) is one of the steps that will get it done. We need to continue to support this effort in order to achieve the goal that is so close at hand.

I know that it is difficult to con-tinue to be patient, while we see dollars literally being stolen from us by these crooks that buy illegal-ly. But it is important to remember that while it is tempting to make more money in the short term by doing what they do, the only truly permanent solution is to deal with the problem legislatively.

That’s what your association is doing. Please continue to support our efforts.

Thank you. ■

Legislative Committee Update

Jan Schneider


Mack’s Marketing CornerBy: Mack Hembree, Gems N’ Loans

Building A Powerhouse of a CompanyTo have a truly effective powerhouse of a com-

pany, a pawnshop needs to be firing on all cylinders and highly effective in four critical areas:A. A creative and well planned promotion/advertis-

ing campaign.B. Great looking stores.C. The most important and most cost effective in the

long run is to have highly trained, knowledgeable, gifted, charming team members that are not only very effective sales closers but leave a positive impression on your customers (recruiting these types of employees is another subject).

D. A store owner that constantly works at improving all three of the above.

A. Advertising and promotionI have tried practically every form you can think

of. We have a tracking system (another subject) that monitors effectiveness.

So therefore, I will give you my experience rated one through ten with ten being the highest.• Sign spinners – 10 (Highest)• Website – 8• Billboards – 7

• TV – 5• Newspaper – 2• Direct Mail – 1• Booths at Business Fairs,

etc. – 1 B. Great looking store

Store appearances are im-portant because customers that buy, sell or loan on high dollar items (your high profit items) need to feel comfortable and safe. Do you think a little old lady thinking of selling a twenty thousand dollar jewelry collection would feel comfortable doing so in your store?C. Highly skilled personnel

Effective, high achieving team members in my opinion have more effect on your stores repu-tation, referrals, repeat business and bottom line profit than anything about your operation. There are so many benefits; it’s difficult to enumerate all of them. For example, low level problems that used to consume my time no longer do, bad buys are not an issue, customers complaints are very minimal or seldom and jealousy, fighting and immature ac-tions are a very small issue.

Probably one of the most rewarding feelings I get

spring 2010 13

as an owner is repeat praise from customers about how much they love our great service and would never go anywhere else. Another benefit is my abil-ity to go on many trips and vacations feeling secure that everything will run smooth (not that problems don’t arise because they do). Having a pool of talented people also gives you a great resource for building an excellent management staff.

All four of the above suggestions are things to aspire to and I feel it takes constant work and atten-tion. I am not satisfied yet and probably never will be, always tweaking.

When hiring staff I used to take the easy way. I learned some hard lessons that cost me dearly. Dedicating yourself to building a top notch staff is not easy and is time consuming but should be your highest priority. Training is huge with two impor-tant ingredients: product knowledge and sales/cus-tomer relations.

Product knowledge and counter practices are ar-eas we spend a lot of time on, starting with our Direc-tor of Training, John Martin, teaching on all the ba-sics and practices. They practice on writing dummy loans, etc. Next they go through counter training with different managers. Following that, they are required to complete the Accredited Jewelry Professional des-ignation given by GIA. We try to determine early on whether they will be able to meet our standards. It is important because of our extensive training. I would

also recommend Brad Huisken’s training, an excel-lent program. However, it will lose effectiveness un-less you follow through with tests both written and oral on his material. It’s great stuff but people forget quickly unless reminded to use it.

For sales and marketing, I am using one of my best sales experts who is also an excellent communicator to constantly give in-house trainings. He also listens and monitors their interaction with customers.D. Store owner that constantly works at improving all three of the above

It took me several years to arrive at this point and it probably has only been the last few years that I have actually been very pro-active with the 3 steps described above.

If your operation is small or you are just start-ing out, all of this may seem daunting. However, you don’t have to get there overnight. I would sug-gest tweaking your operation daily and get a really good sign spinner that has enthusiasm, smiles and waves at people. Don’t be surprised if you have to replace them often (many of them burn out). Ad-vertise for them on Craig’s List and pay them cash every day just above minimum wage (but log them with social security numbers so you can 1099 them) and pay worker’s comp. (it’s cheap).

Questions and especially suggestions and in-put are welcomed. My email is [email protected]. ■

California Assemblyman Kevin de León and Senator Lou Correa get gifts of thanks from California Pawnbrokers

T he California Pawnbrokers Association, CLSDA, presented California Assembly Member Kev-in de León and Senator Lou Correa with framed posters and plaques to commemorate their work and support on AB-99. The new law enables California residents to use the Matrícula

Consular as identification for a loan.

Cheryl Brown, Assemblyman Kevin DeLeón, CLSDA President Diane Taylor, Jan Schneider CLSDA Legislative Chair, and Doug Brown

Larry Anapolsky, Senator Lou Correa, Curt Chapman and CLSDA President Diane Taylor

CompuPawn_Ad_11x8_5.indd 1 12/10/09 7:17:46 AM

ONE


Jon Webster, The Law Offices of Jon Webster

Are you in need of a new pawn ticket? Take this brief quiz to find out!

1. Does your state license number appear on the contract?

2. Above the line for the custom-er signature, is there a box that states in 8 pt font, “You may redeem the property you have pledged at any time until the close of business on ____ (space for a date four months from date loan began). To redeem, you must pay the amount of the loan and the ap-plicable charges which have accrued through the date on which you redeem.”

3. Throughout the text of the loan agreement, do you refer to the customer by various names like: “Customer”, “Pledger” or “Borrower”?

4. Does your contract refer to fire-arms, but you no longer accept for sale or pawn any firearms?

5. Does your contract permit the Lender to “correct clerical mis-takes.”?

6. Does your contract state, “The Lender reserves the right to 24 hours notice of intention to re-deem.”?

7. Does your loan contract state something to the effect that all collateral shall serve as collat-eral for any other loan issued to the Borrower (“cross-collat-eralization”)?

8. Does your loan contract limit the lender’s liability only when a loss is “directly attributable to the Lender’s gross negli-gence or willful misconduct.”

9. Does your contract limit the li-ability of the lender to a certain percentage of the loan extend-ed to the customer?

10. Do you or your sales associ-ates ever discuss with your

customer their loans or their collateral?

If you answered “Yes” to ques-tions 3 through 10, you probably need to consider revising your pawn ticket. If you answered “No” to questions 1 or 2, you Definitely need to revise you loan contract.

We have used the same contract for the past twenty years, why revise what works?

I have a good friend who never hesitates to tell me that the world would not need contracts or lawyers if people would sim-ply be “reasonable.” He is right, of course, but what is “reasonable” to one person is not to another. Thus, one of the most basic purposes an up to date loan agreement fulfills is to spell out to customers what is and is not reasonable.

“Reasonable” varies by indus-try certainly. But across all indus-tries, reasonableness is governed

Legal Corner

spring 2010 17

by current trends and events. Nothing more clearly illus-trates this principle than look-ing at recent gold prices. Would you have paid to buy gold at $950 per ounce one year ago? Probably not. Now, however, the answer would be entirely different. For similar reasons, a contract that “has worked for the past twenty years” may not work for you now. Indeed, the language of such a contract be-ing based on events long past may be your worst enemy and the best advocate of your cus-tomer’s attorney.

The collateral lending in-dustry exists in a very unique environment, completely set apart from other lending markets. Under the Califor-nia Constitution, Article XV, Section 1, interest on a loan is capped at ten percent per year. Anyone who lends above this cap is subject to suit for violating the usury laws of the state. However, so long as a collateral lender’s contract complies with state law, and his or her rates are consistent with state statute, a licensed collateral lender enjoys con-stitutional exemption.

Conversely, non-compli-ance can set aside any statuto-ry forfeiture the collateral lend-er has undertaken. Further, for those loans not foreclosed upon, the collateral lender will find their interest rates re-duced to the state maximum rate of ten percent per annum. As if this eventuality were not enough to motivate you to re-view your pawn tickets for compliance with existing law, you also might be faced with paying the costs of defending a class action lawsuit. Of course, this latter cost will triple if you do not prevail in litigation.

While the collateral lend-ing industry may be directly affected by changes in laws at both the state and federal levels, new case law emerges

each year on such generalized topics as the ability of a lend-er to limit their liability, to impose an arbitration clause as a term of a contract or to unilaterally change the terms of the contract. As a business owner, you are the only one who can determine what, if any, impact this new law may have on your enterprise.

Your printer cannot save you!The are many awesome,

modern, technically brilliant printing companies serving the collateral industry. The best of these take time to understand trends they are seeing in the industry. However, your printer is not licensed to practice law, and should not be relied upon to determine what language should or should not be in your pawn agreements. At the end of the day, they are only respon-sible to print what you order from them.

Your priorities: Conform, Assess and Tailor.

Your obligations to your-self and to the community, in-cluding your peers, is simple: Conform your contract to the minimum requirements of the law; Assess your business needs; and Tailor your contrac-tual terms to your needs.

Conform to all legal requirements with the aid of an attorney.

Before you can conform your contract to the law, you must first determine what are the relevant legal require-ments. Typically this activity is done with the aid of an attor-ney versed in collateral lending laws. He or she can advise you on what is minimally required.

By way of example, do you believe that printing the state’s loan schedule on the back of every contract is re-quired under the law? It is not. The schedule is required to be posted in your store, but does

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not have to be printed on each contract. Not printing a loan chart eliminates almost one-third of the print on the back of a typical loan contact and provides you with the ability to print other, more impor-tant requirements.

Assess your business needs, risks and priorities.

Assessing your business needs, and potential liability is of paramount importance. No two businesses are ever alike. If you routinely make loans in excess of $2,500, you may want to em-phasize the fact that the interest rate stated in the agreement was determined through negotiation between you and your customer, or clearly emphasize an arbitra-tion or liquidated damages clause. On the other hand, if most of your loans are less than $100, you may wish to more clearly explain basic terms, such as due dates and grace periods, so as to avoid overwhelm-ing your typical customers.

Do you want to have a recov-

ery of attorneys fees provision? What about an arbitration clause? A jurisdiction clause? These are considerations that can offer both a positive and negative result. No single answer is right for all lend-ers, and the answer should only come after consultation with your attorney.

Tailor your loan agreement to comply with the law and address your business needs.

Once the first two fundamen-tal examinations have occurred, you can then begin the process of tailoring your loan agreements to best suit your business needs. Tai-loring your contact focuses upon emphasis. You must emphasize terms and conditions that are the most important. Emphasis can oc-cur not only by the size and bold-ness of font used, but almost more importantly, where a term or con-dition appears in the contract. Is the term on the front vs. the back, is it initialed or signed by the cus-tomer or merely stated as a term.

The loan contract is limited in size, so emphasize the important over the “not-so-much” important!

I love Hawaii. The problem is, the entire state is a series of small islands. Being islands, the land is extremely limited. Like land in Hawaii, the available area one has to work with in a typical loan agreement is very limited. Thus, you absolutely must priori-tize the statements you make on your contracts.

I encourage clients to make a list of things that they really want to say in their loan agree-ments. Then, put a number next to that telling me the priority placed on that concept. As draft-ing develops, those deemed most important are addressed.

Define who are the parties to the agreement. Use your legal business name. If you are Joe Blow, doing business as, Blow’s Jewelry & Loan, say so on your loan ticket. But also make cer-tain you file and keep your fic-

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titious business name current through the county or city clerk!

Your customer should be re-ferred to by a single name. Chose “Borrower,” “Pledger,” “Customer,” “Client” or even “You”. However, once you have settled on the name for your customer, don’t switch to another name. Similarly, the collateral should be described by one, easy to use name, like say, “the Collateral”. Don’t switch back and forth between “Collateral”, “Pledged Property” or “Security”. Rule of thumb: If you think the wording is awkward or confusing, it probably is. Change it so that its easy to understand. Write it to the customer you typically have com-ing into the store.

So, what about those quiz questions?1. California Financial Code, §

21301.1 requires a licensed col-lateral lender to set forth their license number on any “adver-tisement” or material denoting the taking of collateral as secu-rity for a loan.

2. Exact wording required under the Financial Code. See, Cal. F.C. 21201.

3. Typically, the customer signs next to a large red “X” as “Pledger.” Consider inserting “(Borrower)” and then refer to the customer as Borrower in the remainder of the contract. If your contract only refers to “Borrower” on the back, there is no defined link to the pledger being the borrower.

4. If you no longer accept fire-arms, the deletion of text con-cerning firearms transactions opens up space for more im-portant disclosures you may wish to convey to your custom-ers.

5. If the lender is unilaterally able to correct clerical mistakes, there may not be the requisite “mutuality” sufficient to sup-port a legally enforceable loan agreement. This statement can open up a loan agreement to litigation. Consider dropping

this statement as a judge is like-ly not to honor its meaning in any event, and will more likely deem it to be overreaching on the part of the lender.

6. Under F.C. §21201.3, a loan con-tract must disclose whether the collateral is stored on or off the premises. Further, the contract must state, “We must return your property within two busi-ness days if your property is stored off premises.” There is no statutorily recognized au-thority that permits the lender to “reserve” 24 hours notice of intention to redeem. Per Cal. Civil Code § 1822, upon

demand, a thing placed on de-posit must be returned immedi-ately upon payment of any lien. Again, a court is likely to deem this overreaching on the part of the lender and this could cause a court to re-examine the law-fulness of the entire agreement.

7. Cross-Collateralization, say-ing the collateral taken on one loan also secures other loans, while are not, per se, unlawful under California law, they are suspect under judicial review and have won the endearing references of either a “dragnet” or “anaconda” clause. (See, Fischer v. First International


CLSDA MEMBERS GET FREE LEGAL ADVICE

Law Office of Jon Webster1985 Bonifacio Street, Suite 102

Concord, CA 94520Phone: 925-686-8790

Fax: [email protected]

The Law Offices of Jon Webster offers CLSDA members 30-minutes of consultation monthly – a $1,200 value!

“One of the many valuable benefits of being a member of CLSDA is having access to FREE legal advice from one of the state’s most knowledgeable pawn operations attorneys.”

- Robert Verhoeff, CLSDA Past President

Bank (2003) 109 Cal.App.4th 1433, 1444) Further, by opera-tion of F.C. § 21002 (describing pledged property as being held as security for “a loan”) and F.C. § 21201 (requiring, “Every loan made by a pawnbroker for which goods are received in pledge as security shall be evi-denced by a written contract”) absent a borrower’s separately initialed agreement to such a clause, the enforceability of a cross-collateralization clause seems doubtful.

8. As a bailee for hire, the col-lateral lender owes at least a duty of due care to protect the collateral (See, Cal. Civ. Code §1851, 1852) Per Cal. Civ. Code, § 1668, any attempt to contract away this legal duty (to act with due care) or to im-pose a lower duty (to require the customer to show the lender acted with gross negli-gence or wilfully) is contrary to public policy and is void. While some lenders elect to

continue to use this clause, its usefulness to protect the lender is extremely doubtful and could be effectively used against the interests of the lender by a consumer orient-ed attorney.

9. While a “liquidated damages clause” can be enforceable if it is not “unreasonable” at the time it was entered into between the parties, a higher standard may apply when such a provision is included in a pawn transaction. This is likely true because such a transaction typically involves the “rental” of money for a cus-tomer’s “personal, family or household purposes”. Under these circumstances such a clause is presumed to be void and contrary to law, “except that the parties to such a con-tract may agree therein upon an amount which shall be presumed to be the amount of damage sustained by a breach thereof, when, from the nature

of the case, it would be im-practicable or extremely diffi-cult to fix the actual damage.” (See, Cal. Civ Code §1671(d)) It is recommended that if any limitation is used, the damage should reflect a multiple of the loan extended. Thus, if you generally loan at 1/3 the fair market value, three times the loan amount extended would likely be deemed reasonable. It is also recommended that the customer initial this provision separately.

10. If your sales or loan associ-ates discuss any loan with any customer over the phone, or there is a chance that this does occur, having a provision that “No information is given by phone” is contrary to your business policy. Indeed, it can lead a consumer attorney to argue you violated a material term of your own contract, and that this invalidates the entire contract. This is an example of how the contract should be tai-

spring 2010 21

lored to your unique business.

ConclusionDeveloping and maintaining a

sound loan agreement is essential to maintaining your constitutional exemption from usury laws. Hav-ing a well thought out agreement

also defines your responsibilities, and minimizes risks for those rare occasions where a disagreement arises with a customer. ■

Kim AndoscaCLSDA Executive Director

Back to Hollywood!

C LSDA’s 54th Annual Convention and Expo-sition at the beautiful

Hilton Universal City – Oct. 22-24 – will be here before you know it!

With so much going on in both the California and federal legislatures this meeting, more than any, will be of utmost importance to you. And we plan to have fun, too!

To make this event a spectacular success, we have lined up terrific speakers and exciting programs for you. Best of all, we have scheduled ample time for fun and adventure.

The convention’s events will feature: • CLSDA representatives who will update you

on our state legislative initiatives and what’s in store for the future on the federal front;

• Seminars that provide real-world information you can put to work at your business, including practical and effective ways to address the gold buying competition;

• An exhibit hall bursting with vendors who will assist you in improving the success of your business;

• Time at Universal City Walk and its world famous amusement park and movie lots;

And much, much more!Registration information will be available May

1, 2010 on the CLSDA web site at www.clsda.org. This meeting promises to be the best, most

educational and enjoyable event you can attend to enhance your business and network with fellow industry professionals.

See you in Hollywood! ■

Executive Director’s Message

Hilton Universal

CityOctober 22-24, 2010


CLSDA Board of Directors

A s a member of the Collateral Loan and Sec-ondhand Dealers Association, one of the benefits you receive is advance notice of

legal decisions which may have an effect on the manner in which you conduct your business. Jon Webster, CLSDA’s legal counsel, has advised the CLSDA Board of a recent trial court decision from Los Angeles County that calls into question our in-dustry practice of permitting customers to mail in their interest and fee payments.

The Los Angeles County Superior Court deci-sion held that, absent the client’s signature, such renewals do not comply with California Finan-cial Code, Section 21201. That statute requires our contracts to be “written.” In the opinion of the trial court, “written” as used in that statute requires the signature of the client. While this decision does not carry the impact such a deci-sion would have from the California Court of Ap-peal, the decision is worrisome.

The CLSDA Board discussed this issue during

the recent director meeting and agreed to seek to have the statute clarified so that “written”-for pur-poses of renewals- does not include “signed.” The earliest this could be corrected legislatively and go into effect would be January 2011. In the interim, CLSDA is recommending that you consider the im-pact this decision may have on your business. As the business owner, we are suggesting that you consult with your own attorney as to how you can respond to this information. As an option you may wish to create an addendum to your pawn ticket that specifically addresses the issue and provides written, signed authority by your customers to is-sue renewals by mail without their signature. You might also choose to address the issue in any new pawn contracts that you develop. How you deter-mine to respond is entirely up to you. CLSDA en-courages you to evaluate all options with your attorney before implementing any change in your store policy.

We hope you appreciate this advance notice and the practical implications the trial court deci-sion has on your business activities. ■

Attention! Your Business Practices May Need Adjustment!


You’re Invited!

AssemblymemberKevin de LeonSenate Candidate, 22nd District

When: April 1, 2010 6:30 - 8:00 PMWhere: Highland Park Pawnbrokers 5033 York Blvd., Los Angeles, CA 90042

Hosted by Doug and Cheryl Brown, CLSDA Members$500 Sponsor or $250 Individual ticket

A Special Reception

Honoring

Great Food & Beverages!

Checks payable to:Kevin de Leon for Senate 2010 ID# 1323711

Contributions to this committee are not deductible for federal income tax purposes. The California Political Reform Act (Proposition 34) places limits on contributions to candidates for state office and imposes certain prohibitions. This request does not seek a contribution in excess of applicable limits or from prohibited sources. An individual, union, PAC, and other entities may contribute a maximum of $3,600 to the commmittee per election, primary and general. A registered Small Contributor Committee may contribute a maximum of $7,200 per election. Contributions are not deductible for tax purposes.

spring 2010 25

Mike Herda, Foundation Chair

T he Collateral Loan and Secondhand Dealers chari-table foundation, CLSD Foundation, continues to receive requests for musical instrument donations.

The most recent of these comes from the Fresno Unified School District: West Fresno School’s Music Program. In order to supply the program with instruments, CLSD Foun-dation will work in cooperation with the Fresno Cultural Arts Rotary Club and the Carver Academy -- Fresno Uni-fied School District.

As a leading service organization in the Fresno area, the Cultural Arts Rotary Club has been involved with the district to establish an extensive afterschool music program for the 2010-2011 school term. The program will reach out to students and their families and provide kids with an opportunity to discover their musical talents and, perhaps, experience a new facet in their lives.

Should you have instruments or funds to support this project, please contact Kim at the CLSDA Office, 209-786-5115. We hope to pull together as many in-struments as possible by June 1. We have a number of shipping or pick-up options from your donation and your donation is tax deductable.

Together we can assist another needed community.Below are a few photos of the students from the Char-

ter School that received our last Foundation donation. ■ •Leading-edgecoursematerials,100%online

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CLSD Foundation – 2010 Donation Project Gets Underway


F amily legend has it that Russian Czar Nicholas II was hot on the heels of

the Anapolsky’s when the clan’s grandmother shepherded the children out of the country.

The situation was much the same for other Jewish families in 1904 Russia. On Tuesday, descen-dants of the immigrants, who set-tled in Sacramento, celebrated the longevity of a downtown business that has remained in the family for more than 100 years.

Three generations of broth-ers, as well as a wife-husband team, have run the business for the last century. The business has changed over the years to become Sacramento’s oldest family-oper-ated pawn shop, California Loan & Jewelry Co. The current own-ers, brothers Larry and Warren Anapolsky, raffled away $30,000 in diamonds and gold Tuesday after-noon as the culmination of a year-long celebration.

“I’m very proud that my grandfather could start a busi-ness that today we are still run-

ning,” said Warren Anapolsky, standing in the shop at 916 J St. “It’s a very important tradition for me that we are able to carry this on.”

In 1904, Leah Anapolsky led seven grandchildren to New York. Mystery surrounds the fate of the parents, who never left Eu-rope. A small yet solid woman, Anapolsky told her oldest grand-son, David, to go as far west as he could, find a place for the family and send for them, Larry Anapolsky said.

Then in his 20s, David Anapolsky considered San Francisco, then headed to Sac-ramento. Most of the family

were tailors. Anapolsky opened a tailoring business in 1906 and slowly sent money to bring the others west.

“He found this was the best place to start up a clothing busi-ness,” said Larry Anapolsky, 59. “It was a new frontier.”

Three years later, twins William and Joseph Anapolsky opened a used merchandise store, New York Second Hand Store, at 1014 Third St., near what is now known as Old Sac-ramento.

“It wasn’t Old Sacramento then,” laughed Larry Anapolsky. “That was Sacramento.”

An old photo of the first store shows their grandfather William in the doorway and a storefront sign advertising “Hats, Clothing, Shoes & Gents Furnishings, BOUGHT and SOLD.” Another sign proclaims, “Revolvers a Specialty.”

“In those days, the true, old second-hand stores dealt with everything from Timex watches and razors to pocket watches and suitcases. Virtually anything that had value,” Larry Anapolsky said. “It would almost be a store that was the equivalent to a flea market.”

In 1922, the twins’ brother Julius opened a men’s outfitter or “haberdashery” called Julius Clothing, also still in the family. Others later opened Capitol Cloth-ing, which is not still run by the family, said Warren Anapolsky, 60.

In the mid-1940s, the sec-ond-hand store also began op-erating as a pawn shop, loaning money to people with goods for collateral, unless the loan and interest were paid back within a deadline. From 1942 to 1964, the family sold many goods to Mexican immigrants coming to work in the region under the Bracero Program.

Congratulations California Loan and Jewelry – 100 Years!

Larry and Warren Anapolsky

spring 2010 27

William and Joseph both died in 1947. William’s sons, Sol and Milton, took over the store and re-named it California Loan and Jewelry Co. The boys’ father and their Uncle Milton continued to sell “ev-erything under sun” and offer more pawned-goods loans. Sol’s wife, Bernice (mother to Larry and Warren), joined day-to-day operations after Milton died in 1952.

The only robbery the brothers could recall almost ended their father’s life. In 1961, Sol Anapolsky was shot twice in the doorway as he tried to flee during the crime. Witnesses followed the gunman and tipped police off to his location, and Anapolsky survived.

The store moved three times to various loca-tions on K and J streets, before settling across from Cesar Chavez Plaza, where it still sits. The store shares the block with another pawn shop, taco and teriyaki spots, a Christian Science Reading Room on one end and the redeveloped Citizen Hotel on the other.

Today, more than 90 percent of the merchan-dise is jewelry — new, consigned, pawned or reset. Their father sent both boys to the Gemological In-stitute of America as they got involved in the store

about 40 years ago. Electronics such as stereos, clocks and transistor radios were slowly phased out, as were other goods that became obsolete, in-cluding typewriters and cameras.

“We look at things that have value, and if we think we can sell it later on, we’ll take it,” Warren Anapol-sky said. “Every pawn shop finds its own niche. We’ve been lucky to find our niche with jewelry.”

The front of the shop is filled with jewelry for sale in glass cases. Guitars, which have always been a strong seller, line one wall. A back stor-age area holds items in pawn. A dark and drafty basement holds a Corvette, a Porsche and a black 1906 Studebaker physician’s buggy acquired two years ago.

Over the years, the shop has taken in and some-times sold exotic and pricey items. Those include books, such as a rare copy of “Songs of Innocence,” hand-written and illustrated by William Blake and later sold for $500,000 at Sotheby’s; a Renoir paint-ing; and a 1973 Miami Dolphins Superbowl ring, Warren Anapolsky said.

Their father worked in the shop until his death in 1979, and their mother until well into her 80s. She stopped working only days before her death in 1999.

The shop is poised to be taken on by a new gen-eration when the time comes. Larry’s and Warren’s children — three girls — haven’t shown an interest. But a young cousin, 24-year-old Adam Anapolsky, has been working in the store in his free time since he was 13. A recent graduate of UC Santa Barbara, he is now working there full time. He said he would feel “a lot of pride” to be able to continue the family business now being taught to him.

Warren and Larry said their family has passed down a tradition of integrity in business.

“We treat customers the way we want to be treated — with honesty and fairness,” Warren Anapolsky said. “For a business to last 100 years, you have to have a lot of those elements.” ■

CLSDA Board members attend Congressman David Obey Event. He is the Chairman of the Appropriations Committee.

Congressman Obey with Diane Taylor, Barry Smith and Tony DeMarco


INSURANCE AND BONDS FOR THE PAWNBROKER INDUSTRYPhone: (866) 4EZ-BONDS or (866) 439-2663 Fax: (818) 345-1878www.uhleinsurance.com • [email protected]

SPECIALIZING IN PAWNBROKERINSURANCE AND BONDS FOR

OVER 27 YEARS

PROBLEM:With gold prices expected to hold or rise,

more and more unlicensed gold buying will con-tinue to challenge the legitimate, licensed indus-try. CLSDA will continue to work to combat this epidemic problem.

As we study the issues involved we find that the problem is not the penalties (see attached copy of the existing law (Cal. Bus. & Prof. Code)). Under existing law, holding oneself out as a secondhand dealer without being licensed is a misdemeanor (Sect 21640). It is also unlawful to advertise as a secondhand dealer without being licensed (Sect 21636.6). A conviction for the first offense is punishable by a fine not exceed-ing $1,500, a second offense by

$5,000, and a third by $25,000 (Sect 21645).The problem is that law enforcement and Dis-

trict Attorneys (City Attorneys in Southern Cali-fornia) do not want to spend the time to enforce what is already in existing law. They basically say it is too expensive.

GOLD BUYING – The Unlicensed ChallengeThis information has been provided to members of CLSDA as a courtesy. It is not intended to be and should not be depended on as legal advice. It is important that all members consult with their own attorney and accounting professional to confirm the accuracy and legality of the information provided prior to using it. This information is not designed to be all inclusive and summarizes the law in some instances.

spring 2010 29

SAMPLE LETTER TO LAW ENFORCEMENT Date________________________ Police Department________________________, Chief of PoliceAddressCity, St Zip

Dear Chief ___________________________________:

I am licensed by the State of California to purchase gold from the public. As such, I am con-cerned about an issue of importance that may be occurring in your jurisdiction.

It has come to our attention that ______________________________ is advertising that they pur-chase gold from the public. As you may know, CLSDA (Collateral Loan and Secondhand Dealers Association) members work in cooperation with law enforcement agencies to educate and advise its membership of the legal requirements regarding the reporting of all pawn and secondhand transactions to appropriate agencies. They work in cooperation with various law enforcement agencies to hunt down and identify stolen merchandise and report immediately if we suspect fraud or misrepresentation from any transaction. In fact, CLSDA members believe so strongly in full and complete disclosure that through our Association they are at the forefront of supporting state legislation to demand even more timely and complete transaction reporting through the electronic transfer of transactions.

Given this background, we want to bring to your attention that while we support consum-ers having a choice in where and with whom they do business, those businesses must nonethe-less strictly adhere to all laws and regulations that govern our industry. You undoubtedly know ______________________________ must possess all appropriate licenses and certificates for each city, county and state in which they do secondhand purchasing business. Additionally, we are sure your department is knowledgeable about pawn and secondhand transaction requirements as set forth in Business and Professions Code 21628 (B&P Code 21628): Every secondhand dealer or coin dealer must report receipt of purchases to the chief of police or to the sheriff including personal identification of the seller and a complete description of the property (B&P Code 21628 enclosed for your referral).

While we do not suggest that any of the transactions at these locations will involve stolen merchandise, it is possible that this issue could arise and, with the appropriate reporting and over-sight, stolen property issues could be avoided.

We request that the named businesses be held accountable to all standards that apply to Cali-fornia pawnbrokers, secondhand dealers and coin dealers, including those standards as found in B&P code 21636 that calls for the dealer to “retain in possession for a period of 30 days” all trans-acted property and that property be available for inspection by law enforcement (B&P Code 21636 enclosed for your referral).

We greatly appreciate your attention to this matter and offer any additional information or sup-port your department may need. If you would like to discuss this matter, please feel free to contact the association’s administrative office at 209-786-5115.

Sincerely,

TAKE ACTION: Contact your local DA or City Attorney and

Chief of Police to see if they will start enforcing ex-isting law. Your City Attorney or District Attorney can obtain an injunction against anyone advertis-ing one of these “Gold Buying” events not licensed under B & P Sect. 21646.

Another, more informal method would be to contact the hotel where these “Events” are held and

tell them that the event is unlawful and could sub-ject the hotel to a suit by the DA or by a licensed secondhand dealer.

You may notify CLSDA of possible unlicensed entities in your community and we’ll demand ac-tion from your local law enforcement. Call CLSDA for details at 209-786-5115 or to get electronic cop-ies of the sample letters.


SAMPLE LETTER TO SUSPECTED UNLICENSED GOLD BUYER Date

CompanyAddressCity, St Zip

Dear Sir or Madame:

The Collateral Loan and Secondhand Dealers Association (CLSDA), is the collective voice for California’s pawnbrokers and secondhand dealers.

As you may know, CLSDA works in cooperation with law enforcement agencies to educate and advise its membership of the legal requirements regarding the reporting of all pawn and secondhand transactions to appropriate agencies. We work in cooperation with various law enforcement agencies to hunt down and identify stolen merchandise and report immediately if we suspect fraud or misrepre-sentation from any transaction. In fact, CLSDA members believe so strongly in full and complete disclo-sure that through their Association they are at the forefront of supporting state legislation to demand even more timely and complete transaction reporting through the electronic transfer of transactions.

Given this background, we want to bring to your attention that while we support consumers having a choice in where and with whom they do business, those businesses must nonetheless strictly adhere to all laws and regulations that govern our industry. You undoubtedly know, all secondhand dealers must possess all appropriate licenses and certificates for each city, county and state in which they do secondhand purchasing business as set forth in Business and Profes-sions Code 21628 (B&P Code 21628): Every secondhand dealer or coin dealer must report receipt of purchases to the chief of police or to the sheriff including personal identification of the seller and a complete description of the property (B&P Code 21628 enclosed for your referral).

If you have not yet acquired your California Department of Justice-issued secondhand dealers license, we suggest you contact your local law enforcement agency for help in filing the appropriate application. Further you may contact the Department of Justice at 800-952-5225.

CLSDA is committed to advancing the pawn and secondhand industry throughout California. In order to succeed on behalf of our members we wish to work in cooperation with law enforce-ment agencies to ensure that all business practices adhere strictly to local and state regulations and all transactions are reported appropriately.

We greatly appreciate your attention to this matter and offer any additional information or sup-port your company may need. If you would like to discuss this matter, please feel free to contact the association’s administrative office at 209-786-5115.

Sincerely,

ILLEGAL GOLD “PARTIES” or HOTEL EVENTSPoints to use when talking with anyone con-

sidering holding or hosting an “illegal” gold event:The regulation defines a secondhand dealer

as “any person whose business includes buying, selling, trading, taking in pawn, accepting for sale on consignment, accepting for auction or auction-ing secondhand tangible personal property (B&P Code 21626a).

• A secondhand dealer must be licensed (B&P Code 21640)

• All transactions must be done at the loca-tion on the license (B&P Code 21642.b.1)

• All secondhand dealers shall report all transactions to the Chief of Police or Sheriff (B&P Code 21628)

• Every secondhand dealer shall hold for 30 days all tangible personal property ac-quired, and will make it available for in-spection by law enforcement (B&P Code 21636)

Violation of any of the above is a misdemeanor with up to a $1,500 fine and/or 60 days in county jail (B&P Code 21645).

If you are the host of the gold party you may be held equally liable with the buyers (Penal Code 31).■

PO Box 1826 Valley Springs, CA 95252

1.800.773.1626www.northamericanmetals.com

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You’ll Love What We Give You Back!Check out our website and see what folks all over the country

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