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1 Department of Justice DEPARTMENT OF JUSTICE SECONDHAND DEALER AND PAWNBROKER LICENSING Please note that this information (pages 41-43) was provided by the Department of Justice and as presented must be confirmed for accuracy by that Department. Further note that with the passing of AB391 in 2012, many of the procedures and requirements listed will be updated significantly in the coming months. CAPA will work to provide these update periodically to members. INTRODUCTION On January 1, 1981, the enactment of Assembly Bill 2967, had a substantial impact on Article 4, Tangible Personal Property, of the Business and Professions Code Section, regulating secondhand dealers. The intent of the bill was to provide law enforcement agencies with a means to curtail the dissemination of stolen property and to facilitate its recovery by means of a uniform statewide, state administered secondhand dealer licensing and reporting program. On January 1, 1994, the enactment of Senate Bill 939, added Chapter 3, Licensure, to Division 8, Pawnbrokers, of the Financial Code Section, which established specific licensing and qualifying parameters for pawnbrokers. The Secondhand Dealer and Pawnbroker Licensing Unit was established to implement the provisions of the bill, provide broad administrative and regulatory assistance, and information to local licensing agencies, special interest groups and the general public. More specifically, the Unit: maintains an automated off-line system of licensed state secondhand dealers and pawnbrokers; prescribes and provides all licensing and reporting forms; assist agencies with the implementation of state licensing procedures; and provides listing of licensed secondhand dealers and pawnbrokers statewide. The following information may serve as a resource for investigative hints, aids and references involving the daily activity of secondhand dealers, coin dealers, or pawnbrokers and should not be misrepresented as an opinion of the Department of Justice. To assist investigators and city/county licensing agencies providing oversight of secondhand dealer and pawnbroker licensing, the following information, overview and frequently asked questions may be of assistance. LICENSING AGENCY The city/county licensing agency (chief of police or sheriff) is delegated the responsibility to implement secondhand dealer and pawnbroker licensing processes into their local program. As such, new agencies are suggested to: (1) Obtain a list of all local general, secondhand dealer or pawnbroker permits/licenses issued within their jurisdiction (2) Review any old licensing records and procedures; a (3) Request from the DOJ Secondhand Dealer and Pawnbroker Licensing Unit any listing or information of licensed secondhand dealers or pawnbrokers currently identified in their jurisdiction CALIFORNIA STATE COMPLIANCE The above information collectively can be utilized as a source to identify any existing problems or issues. DOJ LICENSING PROCESS The local licensing agency (chief of police or sheriff) is required to accept an application from any person desiring to be licensed as a secondhand dealer or pawnbroker in their jurisdiction pursuant to Sections B&P or FC. Prior to the granting of a license, the local agencies are required to submit the secondhand dealer or pawnbroker application package to DOJ for processing. The application package consists of the Secondhand Dealer or Pawnbroker License Application form (JUS 125), a copy of the Request for Live Scan Service form (BCII 8016) for all recognized owners, partners or corporate officers and a check made payable to DOJ. The application processing fee and an additional fee for each fingerprint submission will need to be paid at the Live Scan site. DOJ will conduct a criminal background check and comment on the applicant s eligibility for the license by letter within 30 days of receipt of the application. In addition, pursuant to Section FC requires a pawnbroker applicant to file with the licensing agency a $20,000 non-revocable surety bond in favor of the State of California. In addition, Section FC requires the applicant to submit to the licensing agency a certified financial statement that he or she has at least $100,000 in liquid assets, not including real property, to be utilized in the course of business; or post a non-revocable bond in the amount of $100,000 with the local licensing agency prior to the issuance of a pawnbroker license. A copy of the surety bond and financial statement are no longer sent to DOJ as of 4/1/2009. If the applicant s background check does not reveal a conviction of a stolen property related crime, DOJ shall assign the applicant a unique secondhand dealer or pawnbroker license number, partially prepare the license for issuance, and forward it to the licensing agency with the comment letter indicating that the applicant s background check would not preclude the licensing agency from issuing the license. The secondhand dealer and pawnbroker license number assigned by DOJ consists of two sets of four numeric characters separated by a hyphen. The first set of four numbers identifies the police or sheriff department issuing the license, using the city/county code for the agency (i.e., 1942-XXXX, Los Angeles Police Department, 1900-XXXX, Los Angeles Sheriff s Office). The second set of four numbers identifies the type of business activity (secondhand dealer or pawnbroker). A secondhand dealer will be assigned a number that begins with 1000 and ascends (i.e. XXXX-1000, XXXX-1001); and a pawnbroker is assigned a number that begins with 0999 and descends (i.e. XXXX-0999, XXXX-0998). Although DOJ has the responsibility to comment on the applicant s eligibility for the license, the local licensing agency Department of Justice PHONE
2 Department of Justice Department of Justice makes the final decision to issue or deny a state secondhand dealer or pawnbroker license. RENEWAL PROCESS Pursuant to Sections B&P and FC, a secondhand dealer and pawnbroker license is renewable every other year from the date of issuance and is subject to a renewal fee. The processing fee shall be collected by the agency and forwarded to DOJ. In addition, pursuant to Section FC, the renewal of a pawnbroker license requires the local licensing agency to ensure a $20,000 non-revocable surety bond be filed with their agency, made in favor of the State of California, prior to the renewal of that license. A copy of the surety bond is no longer sent to DOJ as of 4/1/2009. Questions regarding secondhand dealer or pawnbroker laws, licensing procedures and renewal processes should be directed to the DOJ s Secondhand Licensing and Pawnbroker Unit shd.pblicensing@doj.ca.gov. FREQUENTLY ASKED QUESTIONS Who is required to obtain a State secondhand dealer license? Pursuant to Business and Professions (B&P) Code Section 21626, a secondhand dealer is any person whose business includes buying, selling, taking in trade, taking in pawn, taken on consignment, accepting for auction or auctioning secondhand tangible personal property. A secondhand dealer must be licensed pursuant to Section B&P. A Coin Dealer whose principal business is that of coins is exempt from licensing. However, they are required to report all tangible personal property transaction to the law enforcement agency on a daily basis, with the exception obtaining a fingerprint on the report form unless prescribed by local ordinance (21628 B&P), and hold the property acquired for 30-days (21636 B&P). Who is required to obtain a State pawnbroker license? Pursuant to Financial Code (FC) Section 21000, a pawnbroker is any person engaged in the business of receiving goods in pledge as security for a loan. As of January 1, 1994, a pawnbroker must be licensed pursuant to Financial Code Section A Pawnbroker is also a secondhand dealer, but a secondhand dealer is not a pawnbroker. Also, effective January 1, 1994, Section FC requires a pawnbroker applicant to file with the licensing agency a $20,000 non-revocable surety bond in favor of the State of California. In addition, Section FC requires the applicant to submit to the licensing agency a certified financial statement that he or she has at least $100,000 in liquid assets, not including real property, to be utilized in the course of business; or post a non-revocable bond in the amount of $100,000 with the local licensing agency prior to the issuance of a pawnbroker license. What are the secondhand dealer and pawnbroker laws and how will this information benefit my investigation? The secondhand dealer and pawnbroker laws, Business and Professions (B&P) Code Sections and Financial Code (FC) Sections , are guidelines established to regulate licensed secondhand dealer and pawnbroker businesses. This information may assist to standardize your investigation and provide a level of expectation of the businesses. Who is required to administer this licensing requirement? The chief of police, sheriff or their designee, who has jurisdiction over the place of business, is recognized as the licensing authority. It is their responsibility to administer, maintain and enforce this State law. (B&P 21641, FC 21300) Since this is a state law what is the Department of Justice s role? The Secondhand Dealer and Pawnbroker Licensing Unit was established to implement the provisions of the law, to provide a broad administrative and regulatory assistance, and information to law enforcement agencies, special interest groups and general public. The Unit is the central point of contact for the secondhand dealer and pawnbroker laws. The Unit provides assistance to the chief of police or sheriff implementing a licensing program by providing summaries, overviews, informational booklets and forms. The Unit maintains an automated offline system of licensed State secondhand dealers and pawnbrokers and upon request, provides listings and information of licensed secondhand dealers and pawnbrokers jurisdictionally and statewide. In addition, the Unit shall prescribe and provide all licensing and reporting forms, regulation summary and program overview. (B&P 21625) What is Tangible Personal Property? Tangible Personal Property is defined as property which possess or demonstrate having had a manufactured applied serial number, owner applied name or number or inscription; in addition, jewelry and sterling silver, which is identified on the Attorney General s list of tangible personal property. (B&P 21627) What are the guidelines for secondhand dealers? Secondhand Dealers, Coin Dealers and Pawnbrokers acting as secondhand dealers are regulated under Article 4, Tangible Personal Property, of the Business and Professions Code. These businesses are required to: (1) File a report of acquired tangible personal property, at their place of business, with the local law enforcement agency (JUS 123). However, property acquired outside their place of business is only subject to record keeping; (2) Retain a copy of the acquisition repo (3) Retain a copy of the itemized bill of sale; an (4) Hold the acquired property for 30 days. Secondhand dealers are required to store property on premises and make available to law enforcement personnel upon request. However, off-site is permissible as long as the location has been identified in writing. What are the guidelines for pawnbrokers? As of January 1, 1994, Chapter 3, Division 8 was added to 42 CALIFORNIA PAWNBROKERS ASSOCIATION
3 Department of Justice the Financial Code Sections which identified licensing and qualifying parameters for businesses acting as pawnbrokers. These businesses are required to: (1) File a report of acquired tangible personal property, at their place of business, with the local law enforcement agency (JUS 123). However, property acquired outside their place of business is only subject to record keeping; (2) Retain a copy of the acquisition repo (3) Retain a copy of the itemized bill of sale (4) Hold the acquired property for 30 days, pawns are required to be held for a four month period. Pawnbrokers are required to store property on premises and make available to law enforcement personnel upon request. However, off-site is permissible as long as the location has been id What is the purpose of reporting acquired property? The purpose of reporting acquired property by secondhand dealers and pawnbrokers is to provide law enforcement agencies with possible leads of property that has been reported stolen and identify the person initiating the transaction with physical description and thumb print. What is required on a secondhand dealer report form JUS 123? The Secondhand Dealer/ Pawnbroker Report Form (JUS 123) is standardized four part report form. This form shall be filed with the local law enforcement agency daily and be complete, accurate and legible. The specifics shall disclose: (1) The customer s personal information (2) Store information (3) Item description (4) Transaction information (5) Attestation to the disposal of the described property; a (6) Possess a legible copy of the persons thumb print I ve received the Daily Report Form (JUS 123), now what? Upon receipt of the Daily Report Form (JUS 123), the law enforcement agency should enter the pawn/buy information into the DOJ s Automated Property System Data Base via CLETS. Refer to your copy of the CJIS manual for the format. The original copy (top) of this report should be retained by the governing agency and, if applicable, a copy sent to the agency where the pledger or seller resides. If the property is identified as stolen, this report form may be admissible in court as evidence tying the suspect to the property. Accessing the Automated Property System Data Base? Refer to your copy of the California Justice Information System Reference (CJIS) manual for the appropriate entry/ inquiry format. This will provide information on how to do an entry, locate, inquiry, etc. What is a Hit Confirmation notice? A Hit Confirmation is a notice generated by another law enforcement agency that may have located your property. It is imperative to respond to the Hit Confirmation, refer to your CJIS Manual for direction. I need more time to investigate my case and my property has been identified? If you need additional time to further your investigation and seizure is not an option, you may want to place a 90-day hold on the property. A 90-day hold requires for the secondhand dealer or pawnbroker to secure the property until the hold is released or they are directed for disposition. (B&P 21647) Can I seize my property? A warrantless property seizure is a sensitive area, with case law protecting the secondhand dealers and pawnbrokers interest (G&G Loan vs City of Oakland), all matters involving the seizure should be directed to your city/ county attorney for legal advice. Property seizure should possess evidentiary value. The property should be admitted in court as evidence and adjudicated by the court to the rightful owner. I ve seized the property and the case has been adjudicated or rejected and now I have the property. How do I dispose of the property? Property in the possession of local law enforcement agency should refer to Penal Code Sections for guidelines. To ensure compliance with property disposition you should seek legal advice from your department s legal staff. What if the property is not in the possession of the secondhand dealer or pawnbroker? By law, secondhand dealers and pawnbrokers are allowed to store tangible personal property off site. However, the site must be disclosed on the State license or they should possess a letter from the issuing agency authorizing the offsite storage without disclosure on the State license. If the secondhand dealer or pawnbroker has purchased, accepted for consignment or accepted in trade tangible personal property and have disposed of the property prior to the conclusion of 30 day hold they may have violated State law. (B&P 21636) What constitutes a violation? Violations are defined as a person knowing or should have known that a violation was being committed. It is a misdemeanor and subject to fine and jail time. (B&P * FC 21209) How can a license be denied, canceled or revoked? The chief of police or sheriff is recognized as the licensing authority. He/She has the authority to cancel, suspend or revoke any secondhand dealer or pawnbroker license issued within their jurisdiction, providing the applicant or licensee has been convicted of: (1) An attempt to receive stolen property; or (2) Any other property related crime. However, a license shall not be canceled or suspended based in a violation contained in Article 4 or Article 5, of the Business or Professions Code, or Division 8 of the Financial Code unless the violation demonstrates a pattern of conduct. B&P , and FC 21307) Department of Justice PHONE
4 Department of Justice EDMUND G. BROWN JR. Attorney General State of California DEPARTMENT OF JUSTICE BUREAU OF CRIMINAL INFORMATION AND ANALYSIS Automated Systems Program P.O. BOX SACRAMENTO, CA Facsimile: (916) (916) ATTORNEY GENERAL S SECONDHAND DEALER REPORTING LIST The personal property items listed below are commonly sold by secondhand dealers and constitute a significant class of stolen goods. The acquisition of these items, in addition to all tangible personal property items that bear serial numbers, inscriptions, or initials by secondhand dealers, must be reported to local law enforcement pursuant to Business and Professions Code Section (b)(3) and Financial Code Section JEWELRY STERLING SILVER UTENSILS Department of Justice 44 CALIFORNIA PAWNBROKERS ASSOCIATION
5 PHONE
6 46 CALIFORNIA PAWNBROKERS ASSOCIATION
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8 48 CALIFORNIA PAWNBROKERS ASSOCIATION
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10 50 CALIFORNIA PAWNBROKERS ASSOCIATION
Department of Justice
DEPARTMENT OF JUSTICE Secondhand Dealer and Pawnbroker Licensing Please note that this information (pages 53-67) was provided by the and as presented must be confirmed for accuracy by that Department.
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