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To Avoid Problems, Businesses Buying Gold Should Comply With Requirements

To Avoid Problems, Businesses Buying Gold Should Comply With Requirements

A series of complex and inscrutable laws govern the purchase of gold and jewelry. These reporting requirements are intended to reduce the incentive to traffic in stolen property and to assist victims and law enforcement in identifying and recovering such stolen property.

It would be rare, indeed, for someone offering to sell gold or jewelry to reveal that it was stolen or being sold for someone with an extensive criminal record or who lacks proper identification. If the business actually knew, or should have known, that such gold or jewelry was stolen, then the business is acting as a fence and can be prosecuted to the utmost extent of the law. In most instances, the business is doing its best to navigate a complex web of intricate laws and regulations. This case concerns a pair of businessmen who were trying to observe these regulations, but wound up getting arrested anyway. H.I. and M.A. (not their real initials) were arrested on October 19, 2009, as was an employee. They were charged with a variety of misdemeanor violations of failing to completely fill out second hand dealer transaction forms. The prosecutor alleged violations of Chapter 538, Florida Statutes.

The defense investigation uncovered a huge gray area in which police have the authority to arrest or not to arrest. Police focused on this business, it is believed, because it was regulated as a second hand goods dealer as opposed to a pawn shop.

Pawn shops are required by law to maintain possession of items for at least 30 days. 539.01(9)(c). Second hand goods dealers, on the other hand, are required to keep possession for just 15 days. 538.06(1). Police prefer the pawn shop regulations, because they provide a longer period of time for law enforcement and victims to search for stolen goods.

In addition to a longer holding period, pawn shop regulations allow local law enforcement to impose fines and lesser penalties for violations of regulations. Unintentional pawn shop violations may be treated with a warning or minor fine. 539.01(7).

There is no similar provision for minor penalties against second hand goods dealers.  538.07 and 538.11. Police felt compelled to make arrests, primarily because there was no provision for imposing sanctions in any other way.

Attorneys Jeffrey H. Garland and T. Charles Shafer worked together defending M.A. and H.I. against these charges. A conviction, even for a misdemeanor, would have disqualified both individuals, as well as their business, from conducting second hand goods business. Their entire livelihood was at stake.

After the regulatory shortcomings were identified, it became apparent that law enforcements primary goal was to encourage compliance, not to put honest gold and jewelry dealers out of business.

While the case was pending, M.A. and H.I. worked closely with their attorneys. They learned that law enforcement was utilizing antiquated and haphazard methods of enforcement of the regulations. For example, it was okay to describe an object as a gold ring which would be a virtually useless description to a victim trying to identify stolen property. M.A. and H.I., on their own initiative, developed a method of digitally imaging each piece of gold or jewelry which was bought or sold. The digital images were submitted to law enforcement along with the required form. Both the forms and the images were submitted electronically. The initiative of these clients to help solve an ongoing problem was recognized by law enforcement and the prosecution.

Based upon these circumstances, the State agreed that M.A., H.I., and their employee, could each enter into a 6-month deferred prosecution agreement. They did so, and each successfully completed the agreement. All charges were dropped. They remain in business buying and selling gold and jewelry.