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‘Cash for gold’ gets blamed for burglaries: Federal Way seeks stricter regulation

Ryan Vanderlinda held a sign on Friday at the corner of 320th Street and Pacific Highway South advertising the services of Federal Way’s American Gold Inc. The business buys precious metals. The city council is considering stricter regulation of businesses that buy jewelry, gold and other precious metals.  - Jacinda Howard/The Mirror
Ryan Vanderlinda held a sign on Friday at the corner of 320th Street and Pacific Highway South advertising the services of Federal Way’s American Gold Inc. The business buys precious metals. The city council is considering stricter regulation of businesses that buy jewelry, gold and other precious metals.
— image credit: Jacinda Howard/The Mirror

Federal Way has seen an increase in burglaries, specifically those in which jewelry is stolen.

The jump in crime is being blamed on the proliferation of “cash for gold” businesses, which offer on-the-spot cash for precious metals.

Police suspect stolen jewelry is finding its way to “cash for gold” dealers that have set up shop on a temporary basis, looking to make a fast profit. Some of the dealers operate without a business license, and some fail to document the items they purchase and the sellers of those items, police chief Brian Wilson said.

To curb jewelry theft, the Federal Way City Council is considering stricter regulation of businesses buying coins, gold, silver and other precious metals.

The regulation would come by amending the city’s ordinance related to pawn brokers and secondhand dealers.

“Our goal is to deter stolen jewelry trafficking,” Wilson said.

From 2009 to 2010, Federal Way experienced an increase in residential burglaries. In 2009, 559 of these crimes were reported. Last year, that number rose to 645. This reflects a 15 percent increase. Burglary cases involving stolen jewelry jumped from 110 to 124 — a 13 percent increase — in the same time frame, Wilson said.

Proposed amendments

Stricter regulations would give police more resources and time to locate stolen goods that are bought by secondhand dealers, Wilson said. The ordinance amendment is directed at secondhand dealers that are temporarily locating in Federal Way. Some of the temporary businesses, according to police, are operating out of kiosks, gas stations and grocery stores.

The revised ordinance would require secondhand dealers to:

• Acquire a temporary business license if they are doing businesses for 90 days or less.

• Operate between 7 a.m. and 8 p.m.

• Hold on to purchased items for 45 days before shipping them offsite. Under the city’s current ordinance, dealers are subject to a 15-day hold period.

• Maintain detailed records of each transaction involving gold or other precious metals. The records would include details such as the seller’s name, address and description. A description of the item being purchased would also be required. The records would be entered into a police database and made available for law enforcement viewing for up to three years.

Violation of the ordinance would be a misdemeanor offense punishable by up to a year in jail and a $5,000 fine.

“We are being proactive,” Wilson said during a Feb. 8 city council subcommittee meeting. “We’re really pushing this and I think it will yield results for us.”

Business concerns

Frank Kuhn, owner of American Gold Inc., disagrees.

American Gold has come up in city council discussions about the amended ordinance. Kuhn has operated the business for six months out of a building shared with a Shell station on Pacific Highway South. Kuhn said he documents the goods he purchases, makes photocopies of sellers’ identification cards and holds items for 30 days.

“We’re honest. We do good business,” he said. “We provide a good service to consumers.”

Kuhn is opposed to the stricter regulations, specifically the 45-day hold period. The hold time will create a cash flow problem, he said. Kuhn will have to wait longer to make a profit off of items he’s purchased. Meanwhile, customers will continue to come in looking to sell goods. Kuhn will have less money to buy those items.

The ordinance will do little to deter crime while driving legitimate businesses out of town, Kuhn said. Thieves looking to profit on goods stolen in Federal Way will probably try to sell the items outside town or use a mail service, he said.

“It has nothing to do with recapturing stolen items,” Kuhn said. “It’s a burden. It’s red tape.”

Don Rand, owner of Don’s Estate Jewelry and Coin, and Rene’ Criss, owner of Federal Way Custom Jewelers, also testified against the revised ordinance. Most of the city’s secondhand dealers are operating legally, the owners said.

The 45-day holding period might change the owners’ ability to do business. Rand said he planned to open another shop in the South Sound region within the next six months, but will be unable to afford it under a 45-day hold period. Rand felt the extended hold period would hinder cash flow.

“The 45 days is all that really bothers me,” he said.

Deputy Mayor Dini Duclos was responsive to Rand’s and Criss’ concerns and showed interest in finding a solution that would help police and not harm business.

“I really hate to penalize legitimate businesses that are a mainstay in our community,” she said.

The city will consider a 30-day hold period, Mayor Skip Priest said. This would be consistent with legislation being considered at the state level. Federal Way will next discuss the amended ordinance at its 7 p.m. March 1 meeting at City Hall, 33325 8th Ave. S.

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