National Pawnbroker Spring 2018 by National Pawnbrokers Association

Pawnbroker National

Official Publication of the National Pawnbrokers Association

The Tax Man Cometh How to Prepare for an Audit

Plus: Pawn Expo 2018: Turn Vision Into Action Donâ&#x20AC;&#x2122;t Let Your Guard Down

SPRING 2018

message from the president

Exciting Times Ahead

Tim Collier NPA President

Here’s hoping the start of 2018 has been a good one for pawnbrokers across the country. With the tax season almost complete and the pawn balance growth season just starting, time will fly by. I’d like to take a little time to share some exciting things upcoming for 2018 and 2019. The NPA has created a couple of new committees to assist with membership, Pawn Expo, and NPA in general. A communications committee is working to create some exciting new social media offerings as well as ideas to improve member benefits. A vendor ad-hoc committee is working to provide insight into making Pawn Expo more exciting and more widely attended. Between these two new committees and the current membership and convention committees, I am confident we will be able to provide a top-notch experience for members and attendees. You won’t want to miss out on these new ideas! I have been spending as much time as is physically possible talking to pawnbrokers and vendors from across the country and gathering ideas to make the NPA and membership a “no brainer.” In order to move the NPA to the next level, we must create new revenue streams so we don’t put too much pressure on our members or vendors. This can be done by providing member benefits that pay for themselves through cost savings to you, the pawnbroker. We are looking into many things, including group health insurance, to provide pawnbrokers with an alternative to the current insurance debacle that is going on across the country for all of us. This could be a huge benefit, but with the uncertainty in Washington, there may be no movement any time soon. There is nothing that can be done currently until we get clarification from the courts. We will be getting input from you, the pawnbrokers across the country, in conjunction with regular gatherings of pawnbrokers to better understand what the NPA can offer to assist you in the daily running of your pawn stores. We want to create an exciting experience at Pawn Expo with educational offerings that make pawnbrokers want to come to the show for fear they will be missing out if they don’t. Pawn-specific seminars have been well received in the past and we are looking to parlay that experience into bigger and better things in 2018 and 2019. We will also be looking at providing insight from longtime pawnbrokers on a variety of topics of interest to pawnbrokers. We have looked at the cost of attending the convention as well as discounts for multiple attendees from the same store and will continue to try to provide more opportunities in the future. Hopefully, we will be able to grow Pawn Expo to the record numbers we had when gold prices soared and diamonds were much more prevalent than they are today. I’m very optimistic the future holds exciting times for the NPA and pawnbrokers. We must simply work together to fine tune what we provide and how we provide it. I hope to see many of you in Washington, DC, for the upcoming Legislative Conference in April. This will be one of the best opportunities for pawnbrokers to share their thoughts on the NPA and where we should go from here. SPring 2018

National Pawnbrokers Association

contents SPRING 2018

Cover Story The Tax Man Cometh 24

HIGHLIGHTS

Member Benefits

Pawn Expo 2018:

Show Your Pride

Get Your Boarding Pass

Turn Action Into Vision

NPA Annual Awards

Donâ&#x20AC;&#x2122;t Let Your Guard Down

Member News

IN THIS ISSUE Message from the President

Message from the Executive Director

A Little Glitter Never Hurt From Your Pocket to Theirs

FBL Scholarship Program

Gift Day 2017

20 44

Compliance

Bank De-Risking

and the Pawnbroker

New NPA Members

State Association Updates

Community Involvement

Thanks, Uncle Jimmy!

Member Spotlights

Business Solutions

Industry Partner

NPA 2018 Legislative Conference

Behind the Scenes

Young Pawnbroker to Watch

Book Corner

Calendar of Events

Advertiser Index

Pawnder This

Fun Facts About Washington, DC

Stopping the Discontinuances

8 13

National Pawnbrokers Association

Rob Anderson R & R Pawn Fran Bishop NPA Government Relations Tim Collier Pacer, Ltd Rudy Klancnik John Fierst Jewelers Mutual Insurance Group Robert Frimet RMF Consulting Emmett Murphy 3 CLiCk Media

Government Relations

Pawnbroker

Events

Contributors for this issue of National Pawnbroker

Spring 2018

Kathy Pierce Monster Pawn Kelly Swisher Arlington Jewelry & Loan

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message from the executive director

NPA staff Dana Meinecke

The Action Begins at Pawn Expo You spoke and we listened! For the past several years, we have heard comments from Pawn Expo attendees that the trek from their hotel room to the Pawn Expo meeting space was too long. We took those comments to heart and this year’s Pawn Expo is moving to a new space! It’s still within The Mirage, but is much closer to the hotel restaurants and swimming pool. Dana Meinecke Speaking of Pawn Expo, we have put NPA Executive together a spectacular rotation of speakers, Director education sessions, and action-oriented events to go along with this year’s theme of “Turn Vision Into Action”. You won’t want to miss keynote speaker Joey Coleman, the hands-on social media training, or the new manager level seminars. The convention dates are July 10-12, so sign up now. Early bird registration ends May 25 and includes a special first-time attendee rate of $299! For more details see pages 30-31. NPA’s 2018 Legislative Conference is set for April 24-25 in Washington, DC. This is the time to head to the Hill and speak first-hand with your elected leaders. Let them know how the rules and regulations they have enacted – Military Lending Act and bank discontinuance – are negatively affecting your business. Other important due dates for you to remember are: nM arch 9 – last day to notify NPA of your interest in a seat on the Board of Directors; applications are due March 30 nA pril 20 – application deadline for a Future Business Leaders scholarship nA pril 21 – last day to submit nominations for NPA’s Annual Awards (Charles R. Jones Lifetime Achievement, Pawnbroker of the Year, Industry Partner of the Year, Outstanding Community Relations, Young Professional of the Year, and Outstanding Pawn Industry Image) Finally, we want to extend a big thank you to the many members who have renewed their membership for 2018. If you haven’t sent yours in yet, we now have a monthly payment option available. The NPA subsists on the funds generated from each of you and we appreciate it. Your support of NPA does not go unnoticed!

Executive Director Dana@NationalPawnbrokers.org

Helen Moore Director of Meetings & Events Helen@NationalPawnbrokers.org

Margie Swoyer Director of Communications & Marketing Margie@NationalPawnbrokers.org

Brittany McCorkle Member Services Program Coordinator Brittany@NationalPawnbrokers.org

Mailing Address: PO Box 508, Keller, TX 76244

Physical Address: 2920 W Southlake Blvd, Ste 120 Southlake, TX 76092 Phone: (817) 337-8830 Fax: (817) 337-8875 NationalPawnbrokers.org National Pawnbroker is the official publication of the National Pawnbrokers Association (NPA), and is published quarterly. No part of this publication may be reproduced without the written consent of Dana Meinecke, NPA Executive Director. Sale or distribution of any or all of the contents of this magazine is prohibited. All rights reserved. For more information on advertising or to obtain additional copies of National Pawnbroker, call (817) 337-8830, or send an email to Margie@NationalPawnbrokers.org. For membership information, email Brittany@NationalPawnbrokers.org EDITOR’S NOTE: This publication is designed to provide accurate and authoritative information on the subject matter covered. It is provided and disseminated with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice is required, the services of a competent professional should be sought. Expressed opinions are those of the author and do not necessarily reflect the views of ownership. © 2007-18 National Pawnbrokers Association: PO Box 508, Keller, TX 76244, (817) 337-8830 NationalPawnbrokers.org EDITOR: Margie Swoyer, Margie@NationalPawnbrokers.org DESIGNED BY: SPARK Publications

National Pawnbrokers Association

Spring 2018

letter to the editor

Thanks, Uncle Jimmy! At the time, I had no idea how much that little shop would change my life.

Some years ago, I was talking with a friend of mine, Jay Kantor from Jay Pays. I was showing him some stones that I had for sale. Written on the corner of one of the diamond papers was “MRBC 1.27ct”. As Jay looked at the paper, half to me and half to himself, he said, “Oh, a Marquise...” Upon opening the paper, he looked perplexed. It was a round diamond. He looked at the paper and then back at me and asked if I had the wrong stone in the paper. I said, “No it’s a Modern Round Brilliant Cut, hence the ‘MRBC’.” It was something Jay had never heard as a term used for a round stone and he found it kind of odd. We joked about it for a few minutes and moved on with our business. Over the years Jay has

just accepted my odd diamond papers without comment. Fast forward to 2017. My mentor, who introduced me to the jewelry and pawn industry, passed away unexpectedly this past February. His name was James Martin (Uncle Jimmy to me) and was from Sarasota, FL, formerly of Crown Point, IN. He was the person who introduced me to the jewelry business when I was just a 21-year-old kid working in the steel mills in Gary, IN. He would let me pick through his scrap gold and find chains and bracelets that I could polish and resell to guys I worked with in the mill. The shop in Crown Point, IN was called “The Crowntique”. I would spend hours hanging out and learning about the magnificent antique jewelry they bought there. Jimmy and my Aunt Shirl ran the shop with finesse and class. It was no more than 400 square feet of show room with a small bench area in back, but it always felt huge because there was so much to look at. Jimmy, who was a Graduate Gemologist, eventually showed me how to grade diamonds and suggested that I attain some formal training. I enrolled in the GIA home study course and learned about diamonds and colored stones. At the time, I had no idea how much that little shop would change my life. Uncle Jimmy and Aunt Shirl, along with their daughter Shaun, moved to Sarasota in 1987. Shortly after that, they opened a little pawn shop in the First Florida Bank building in downtown Sarasota called, of course, The Crowntique. It was a small office on the upper floor of the bank building with no display cases, just (Continued on Page 49)

National Pawnbrokers Association

Spring 2018

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National Pawnbrokers Association

c a l l u s f o r f r e e c o n s u l tat i o n s

government relations

Fun Facts About Washington, DC

Kathy Pierce Chairman NPA Government Relations Committee

The Annual NPA Legislative Conference will be April 24-25, 2018, at the Hamilton Hotel in Washington, DC. If you have read any of the government relations articles in the past, you know why it is important to attend. Small business can thrive and create jobs, but we need the government and banks to give us some breathing room to let us do what we do best. That message gets out when we go to Washington, DC, as a group and “tell our story”. We all have a story – why we became pawnbrokers, our customers, what we do, and why we do it. Some of us are talented jewelers. Some are just trying to keep up with the bills and taxes. If the legislators in DC don’t know our concerns or believe we are the creeps that are portrayed in movies, then we will not survive. So, here are some fun reasons to come to DC:

Meet the Board of Directors and tell us what you want us to do for the NPA. We see lots of comments on other social media pages, so now is your chance to come out from behind that keyboard to talk to us and help us guide your association. As a bonus, come a day early and sit in on the Board meeting. Maybe you will want to join the Board or a committee and work with the NPA hands on. We would love more help!

during his presidency. You can still see his hitching post on your way to meetings.

I hope you plan on joining your fellow pawnbrokers to attend the 2018 NPA Legislative Conference and meet your Members of Congress on The Hill. For more information, visit NationalPawnbrokers.org/ legislative-conference.

Explore the Hamilton Hotel. It’s on The National Register of Historic Places and the architect, Jules Gabriel Henri de Sibour, is famous for the Beaus-Arts style that is prevalent throughout the city. He also designed many embassies in the city. Walk four blocks east to New York Avenue Presbyterian Church located at 1313 New York Avenue NW. President Lincoln and his family attended church there 8

National Pawnbrokers Association

Spring 2018

Walk three blocks south and two blocks west. There it is - The White House. President John Adams was the first President to live there in 1800. Think about that. Forget all the drama happening now and think of John Adams, Thomas Jefferson, and John Kennedy. That’s pretty amazing.

Go to Arlington Cemetery and remember why we are the greatest nation. It will be April in DC, and the trees and flowers alone should bring you to our nation’s capital.

industry partner spotlight

“Unlike our competitors, we have been on the sale side of the transaction providing us with the buyer’s viewpoint which benefits our clients.” - Steve Stallcup

Stallcup Group Matchmaker to the Pawn Industry

n 2008, Steve Stallcup left his job as Vice President of Acquisitions at Cash America after 23 years. Still enamored with mergers and acquisitions, the following year he switched to the seller side and started Stallcup Group. The company, headquartered in Keller, TX, provides exit strategy consulting to independent pawn store owners who are leaving (or considering leaving) the industry. While the pawn industry has seen a lot of changes in the last few years due to increased regulation and uncertain economic times, one of the most significant trends Steve has seen is the number of qualified, private buyers contacting him to acquire his clients. “I’m not sure what is driving that change, but it’s a welcome one!” he says. His company’s challenges are the same as many others - keeping a fresh and recurring presence in front of the almost 9,000 pawn stores that could benefit from his service. “If we don’t reach the mom-and-pop stores or chains with our message, they tend to exit the industry and miss some key steps along the way, resulting in monetary losses.” Stallcup Group has two key advantages that distinguish them from other consulting companies.

Steve Stallcup

1. They have 31 years of pawn industry experience. 2. They represent pawn businesses ONLY. “Unlike our competitors, we have been on the sale side of the transaction providing us with the buyer’s viewpoint which benefits our clients. We also utilize a proprietary competitive and demographic software analysis containing all pawn shops in the United States as well as approximately 1,000+ stores’ financial data to assist in financial pro forma and overall analysis for our clients,” he says. For those unsure what information is needed for a consultation, Steve assures that

SPring 2018

(Continued on Page 11)

National Pawnbrokers Association

pawnbroker spotlight

Fieldstone Jewelry and Pawn Georgia On My Mind

30 years ago, in 1987, John Little started a business called Fieldstone Jewelry and Pawn in Conyers, GA, a small town east of Atlanta. John’s daughter, Lisa Little, began working with him in the store after college. At the time, she had no idea what a pawn store was. After John’s death in 2013, she became the CEO and “do whatever didn’t get done” gal. She recently earned her Certified Pawn Professional (CPP) designation and became the program’s first female recipient. National Pawnbroker (NP): How do you stay

ahead of the competition in your area? Lisa Little (LL): We try to call customers by name, thank them for their business, and build long-term relationships. We also try always to be compassionate, fair, and kind. I have given out many hugs on the other side of the counter to people who have really needed them. NP: In your opinion, what are the biggest challenges facing pawnbrokers today and how can they overcome them? LL: Government regulations - there are so many! We must educate our lawmakers. Many have erroneous preconceived notions about our role in the community. The huge decline in mom-and-pop brick and mortar stores is also a problem. The new generation is learning to buy and pawn online first. That’s a problem when we’re carrying the overhead of brick and mortar stores. We have to develop relationships with our customers that add value and keep them coming in. 10

National Pawnbrokers Association

Spring 2018

Lisa Little, Fieldstone Jewelry and Pawn, Conyers, GA

NP: Do you feel being a woman has made it easier or harder for you to do business as a pawnbroker? LL: I think being a woman is a double-edged sword in the pawn business. For many years, the image of the pawnbroker seemed to be a fat sweaty cigar-smoking bald guy (no offense to fat sweaty cigar-smoking bald guys.) I think coming into a pawn shop and meeting a woman was a nice change from what customers were expecting. In the beginning, I had to get to know my business and the typically-male products, such as tools and firearms, better than the men to be taken seriously by male clients. I do think being a woman sometimes makes younger clients and women more comfortable – especially first-timers. NP: What advice would you give to someone just starting out in the pawn industry? LL: n You aren’t going to like some of the people who come in to do business with you. Be kind anyway. n Grow your loan base. n Get a good education in jewelry, guns, tools, and musical instruments.

n Get to know your customers and their families

LL: There have been many, but let’s be real - it’s the

by name. n Know you are going to make mistakes. Learn from them. n Always be alert. People may target you because of what you have in your stores (guns, gold, coins, jewelry, and cash). n Sometimes help people just because you should, not because it’s profitable. n Know that this industry ruins you from wanting to do anything else. Once you are a pawnbroker, it’s hard to change jobs because the business is so interesting.

people. There’s the girl who walked around my store with a racoon tail attached to her back side. There’s the guy and his dad who had matching piercings all over their faces (and I mean ALL OVER their faces.) There’s the girl who wanted me to solder her belly chain onto her belly ring permanently. There’s the lady who had painstakingly crocheted bright blue yarn into her hair extensions. And there’s the rose and cigarette lady who always pulled her wet, sweaty money out of the front of her shirt. They’re all funny, and I love them all.

NP: You are a participant in the Certified Pawn

Professional (CPP) program. How has the program helped you as a pawnbroker? LL: I have made changes in marketing, security, and operations because of insights gained in these courses. Although I have been a pawnbroker for many years, I found I benefited from hearing ideas from other pawnbrokers and have gained something important from every class. NP: What is the funniest thing that has happened to you since you became a pawnbroker?

(From Page 9)

Stallcup Group

most of the needed information is actually “top-of-mind” for most of their potential clients. “We don’t get into great detail until after we’ve had the initial discovery phone call. The call typically lasts 30 minutes and requires literally no preparation on the part of the pawn company considering their exit options.” The company’s success is related to two things, according to Steve. “Speaking to as many pawnbroker owners as to what we do and that we’re here to only help define their exit options when the time is right. There is so much misinformation in

NP: How does your company give back to the community? LL: We like to give locally as much as possible. Over the years, we have supported many different organizations in our area, particularly those that help children, battered spouses, the military, and law enforcement. NP: Why are you a member of NPA? LL: We are in danger of being regulated out of business.

We must have an organization like NPA to have a voice. I enjoy building relationships with other pawnbrokers from all parts of the globe. The NPA Member Forum has been a very helpful tool.

this industry regarding mergers and acquisitions; it is a must to continue to push information out to folks who will eventually wish to exit. Once they see the spectrum of variables involved, they realize it’s better to partner with us to achieve the very best outcome.” He is especially proud of the “highly positive client feedback from some of our transactions whereby we were able to significantly improve our clients’ selling position which resulted in a much more comfortable transition into retirement and recurring rental income.” Stallcup Group has been an Industry Partner member of NPA since 2009 supporting the SPring 2018

association with advertising and Pawn Expo contributions. “We are Industry Partners with the NPA to support the association that provides tremendous support and service for such hardworking pawnbroker owners looking for best-practices solutions throughout the industry. Stallcup Group wants to assist in the pawnbrokers’ success in every way we can. This industry plays a vital role servicing the working people of this country and we’re proud NPA members!” For more information about Stallcup Group’s service, mission, and history, visit StallcupGroup.com.

National Pawnbrokers Association

government relations

Stopping the Discontinuances

Fran Bishop NPA Government Relations Liaison

While most pawnbrokers were merchandising their stores during that postBlack Friday and pre-12 Days of Christmas period, members of NPA’s Team GRC were in Washington, DC, meeting with Members of Congress and the Department of Defense (DoD). NPA President Tim Collier and Government Relations Liaison Fran Bishop traveled to DC for a whirlwind round of appointments set up by “our man on the Hill”, Cliff Andrews. Many pawnbrokers received cancellation notices in November for their Spark for Business Capital One credit cards. This quickly became another chapter in the book of bank discontinuances of the pawn industry that seems to have no end. During our trip, most of our time was devoted to this issue in meetings with senior policy advisors and staffs of the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs.

That’s why the support and flow of information from our members to the NPA is so important. The grassroots contacts you make in your state and district are invaluable and the backbone of our efforts in Washington. We rely on you to keep that river of information flowing. I can’t begin to emphasize the value and importance of the Capital One information and correspondence supplied to the NPA by all of you in only about a week’s time. We went into each office armed with cancellation letters and a spreadsheet showing over 30 pawnbrokers thus far, located from coast to coast that were affected. We’ve all heard the

saying that one picture is worth a thousand words. Well, it is true. The reactions ranged from dropped jaw silence to comments we won’t put in print. We had great one-on-one meetings with Rep. David Scott (D-GA) and Rep. Blaine Luetkemeyer (R-MO), both of whom serve on the House Committee on Financial Services. They were appalled at the way banks are still treating pawnbrokers, and asked that we make sure they receive additional information about these terminations of banking services to the pawn industry. There will be hearings in 2018 where financial regulators (OCC and FDIC) must appear and provide answers to the Committee. Our job is to make sure Members of Congress have our information in order to ask the questions necessary to get the bottom of the discontinuance issue. That’s why the support and flow of information from our members to the NPA is so important. The grassroots contacts you make in your state and district are invaluable and the backbone of our efforts in Washington. We rely on you to keep that river of information flowing. There’s no better way to reach the headwaters than by attending this year’s annual NPA Legislative Conference in DC on April 24-25. Also during this trip, we were able to schedule a meeting with Department of Defense Office of Financial Readiness personnel at the Pentagon. Our purpose, and theirs, was to initiate an open dialogue between the pawn industry and the DoD with respect to the Military Lending Act (MLA). We were very pleased with the substantive exchange of information by all, their request that we continue our conversations in the future, and even the length of time they spent with us. A particular part of that day’s conversation centered on methods of determining the

SPring 2018

National Pawnbrokers Association

government relations

military or not status of our customers. This included a frank discussion of the MLA section “Optional identification of covered borrower” in that it is up to each credit provider as to how “covered borrower status” is determined. Additional comments around the table were if you have a longstanding business relationship with a customer who lives or works down the street, and you know they are not a ‘covered borrower’, then use your own method of determining their status…just as long as you are aware of the consequences of not accessing the “safe harbor” provided by running a DMDC database check.

One example of the exchange of information during our meeting was just days later when the DoD shared with NPA an advance copy of an Interpretive Rule to the Military Lending Act they were issuing. The section of this document that relates to pawnbrokers clarifies that if you performed a “covered borrower check” within a time period of less than 30 days before doing a pawn transaction with that customer, you still qualify for the “safe harbor” if you used the DMDC website or a credit reporting agency. In other words, a “covered borrower check” done on April 3 when writing a customer’s pawn ticket is valid on that customer for the following

30 days. So, if that customer comes in two weeks after April 3 to do another pawn, renewal, or redemption transaction, you do not have to perform another “covered borrower check”. But, if they come back on May 4, you need to do a new check. We have, of course, sent the DoD a follow-up letter covering the many areas discussed and, to our surprise, that same day we received an acknowledgment note and comments from them. NPA members can be assured that your Government Relations Committee will do everything possible to keep that river of information flowing with the Department of Defense, as well.

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National Pawnbrokers Association

Spring 2018

125 Stores Sold & Counting... Stallcup Group facilitates the sale of 3 more pawn shops, this time in Baton Rouge, Louisiana! January 2018 – Stallcup Group, Inc., an Exit Strategy Consulting firm, announced its successful facilitation of the sale of City Pawn Shops, an independently-owned business comprised of 3 pawn shops located in Baton Rouge, Louisiana. Stallcup Group served as the exclusive financial advisor to the sellers in these highly successful transactions.

Stallcup Group’s thorough analyses of the sellers’ financial data, and the unique attributes and characteristics of both the company and individual stores helped ensure their client achieved all of their selling goals. Here is what other clients of Stallcup Group have to say about their successes: “Stallcup Group’s dedication to the sale of my company resulted in a 12%-15% higher closing price than the initial offer letters from various buyers. To my surprise there were multiple facets of negotiations above and beyond the final purchase price that the Stallcup Group handled with expertise. These results were tangible and financially beneficial. There is no doubt the results would not have been nearly as profitable without Stallcup Group.” – Mike Fisher, Regent Jewelry & Loan, 4 stores in TX “Ultimately, I was most impressed with Stallcup Group’s financial modeling, which is extremely sophisticated, and their ability to package information in a way that buyers want to see.” – Craig McCall, 12 stores AZ/NV

Why Stallcup Group? We have more than 32 years of experience in the pawn shop industry and have closed over $205M in transactions since founding the business in 2009. We are the leader in Exit Strategy Consulting, and solely represent pawn shop owners. All Stallcup Group’s clients have realized a purchase price increase of 10-50% from initial offer to final closing price.

Steve Stallcup

steve@stallcupgroup.com

817.479.3880

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membership

Get Your Boarding Pass

Join the NPA Board of Directors

The NPA Board of Directors is seeking nominations for new Board members. Newly-elected members will be installed at the Annual Membership Meeting and Breakfast on July 10, 2018, at The Mirage in Las Vegas, NV. Being on the Board of Directors offers a lot of benefits. You have the opportunity to improve the association by volunteering your time, skills, and industry knowledge; enrich yourself personally and professionally by networking with industry leaders; learn new skills and business practices. NPA Board of Directors candidates must meet the following requirements before being considered: nM ust be a member in good standing nM ust attend an NPA Legislative Conference in Washington, DC, and the accompanying Board of Directors meeting held in conjunction with the Legislative Conference OR attend two consecutive Board of Directors meetings prior to being considered as a candidate for the NPA Board of Directors nM ust have served on an NPA committee for at least one year

Show Your Pride Membership in a trade association projects a positive image of the company to the outside world by showing your initiative and commitment to following best practices within your industry. Your NPA membership provides you with two opportunities to visibly show your customers that you care enough about them to invest in continued education and leadership. The NPA official STORE DECALS are sent to you each year to be applied to your door or window. They announce to anyone coming in your front entrance that you are a current NPA member and that you have agreed to follow the mission and vision of the pawn industry’s national association. Your membership also provides you with a frameable CERTIFICATE OF MEMBERSHIP imprinted with your store name and join date. Signed by the NPA president, it tells your customers you are proud to be a member of the association. Don’t stick these documents in a drawer. Demonstrate your professional status by proudly displaying them on your door, window, or wall. You paid for it and you’ve earned it, so highlight your success and show your pride! SPring 2018

Two important dates to note: March 09, 2018 – NPA must be notified of your interest March 30, 2018 – Board of Directors application due

For more information about the requirements, commitments, and the nomination process, email Dana@NationalPawnbrokers.org. |

National Pawnbrokers Association

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behind the scenes

Brittany McCorkle NPA’s Newest Staff Member

f you’ve called the NPA office in the last few months, you may have heard a new voice on the other end of the line. That voice belongs to Brittany McCorkle, NPA’s Member Services Program Coordinator. Brittany manages the membership programs while also providing administrative support to Dana Meinecke, NPA’s Executive Director. Even though she’s only been at NPA a few short months, Brittany has been able to jump right in and get the office organized – no small task since the office moved to a new location in December! She was referred by a former NPA employee, Chris Kennedy, who many of you may remember from Pawn Expo 2017. Chris and Brittany worked together at a previous job and he brought her to NPA when he left. One of Brittany’s greatest accomplishments since joining NPA back in August is that she has already been promoted! She started out as Program Coordinator supporting Dana on tasks related to the general management of the association. She has now taken on all of the membership responsibilities, so you will be hearing a lot more from her. Brittany says the most challenging part of her job is juggling multiple tasks “because you have to make sure that everything is done in a timely manner and, most of all, accurate. With that being said, I like a challenge.” She also likes providing support to the office, learning

Brittany McCorkle, NPA’s Member Services Program Coordinator

new things, and being trusted to take on important tasks. “All three aspects build me professionally and help boost confidence in myself,” says Brittany. Becoming more knowledgeable about the association and the industry are two goals of Brittany’s. “I am happy to help you and, if I am unable to answer your question, I will point you in the direction of someone who can. Without all of you, there is no NPA, so it is very important to us to make sure you get the customer service that you expect. I can’t wait to meet all of you at Pawn Expo 2018!” Outside of NPA, Brittany stays busy with her 5-year-old daughter who will be starting Kindergarten in the fall. They enjoy being outside, especially barbecuing at the park.

“Without all of you, there is no NPA, so it is very important to us to make sure you get the customer service that you expect. I can’t wait to meet all of you at Pawn Expo 2018!” - Brittany McCorkle

For any NPA questions, contact Brittany at Brittany@NationalPawnbrokers.org or by calling the NPA office at (817) 337-8830, option 0.

SPring 2018

National Pawnbrokers Association

community involvement

From Your Pocket to Theirs Thank you so much for your continuing support of my educational goals through your scholarship program. I had another successful semester at Ashland [University] and made the Dean’s List due, in part, to your support.” – Julia Newberry, Mansfield, OH If you, or one of your customers, know a college student in need of tuition help, now is the time for them to apply for a Future Business Leaders (FBL) scholarship from NPA. According to CollegeBoard.org, approximately two-thirds of all students require some amount

Willie Showell

of financial help to meet the cost of their higher education. With dramatic increases in tuition fees and the soaring cost of textbooks, the demand is now greater than ever. The FBL program was started in 2003 to give college aid to the children of pawnbrokers or their customers. Since inception, the program has awarded over $140,000 in scholarships. To apply for the scholarship, download the application and guidelines at NationalPawnbrokers. org/community-outreach. Submit the completed form along with the other requirements by Friday, April 20, 2018, to be considered.

Scholarship recipients are chosen based on academic performance, community leadership, and written essay submissions. If you don’t know a student, but would like to donate to the fund, send your tax-deductible contribution to NPA, PO Box 508, Keller, TX 76244.

YOU’VE GOT THE KNOWLEDGE, EDUCATION, AND SKILLS. NOW PROVE IT. Get your Certified Pawn Professional designation: • Validate your experience • Show your commitment to the industry • Stand out from the competition Courses include:

• Store Operations • Security, Risk, & Crisis Management • Marketing, Advertising, & Public Relations • Human Resources • Product Knowledge • Federal Regulations NationalPawnbrokers.org, click on the CPP tab

UPCOMING COURSE DATES: 4/13/18 Little Rock, AR 4/26/18 Washington, DC 5/18/18 Louisville, KY

• (817) 337-8830

“The CPP program is much needed and necessary on many levels. I have been in the industry 20 years, and still learned new things that I may not have found out or considered. The speakers are very knowledgeable, and make the class entertaining. All of the staff at the shop are signing up for classes this year. I also got to meet fellow pawnbrokers from other states that were able to share their experiences.” – Willie Showell, Nathan’s Lynnhaven Pawn Shop, Virginia Beach, VA

National Pawnbrokers Association

Spring 2018

SPring 2018

National Pawnbrokers Association

Spring 2018

events

Raise Your Voice

When you attend the 2018 NPA Legislative Conference, you will:

Become versed on issues facing your

business and what

Become a pawn industry advocate when you join the NPA and your fellow pawnbrokers in Washington, DC, April 24-25, 2018, at the NPA Legislative Conference. Whether you’re new to the industry or a veteran pawnbroker, this year’s conference will give you the opportunity to make an impact on your congressional members.

Meet your elected officials. Share your

intimate knowledge of

Learn how the legislative process

works and how your

you need to do to

the pawn industry and let

participation can make

stay compliant.

them know your stance on

an impact.

current and proposed bills.

Get to know the NPA Board members,

Cliff Andrews, NPA

Network with other pawnbrokers from

across the country who

lobbyist, and members

feel as strongly as you do

of your government

about regulations affecting

relations committee.

your livelihood.

Save travel time and take the Certified Pawn Professional (CPP) course “Marketing, Advertising, and Public Relations” that will be offered on April 25. Registration must be received by April 20. For more information, visit NationalPawnbrokers.org and click on the CPP tab.

Help NPA advocate for the pawn industry.

SAVE THE DATE

APRIL 24-25, 2018

2018 NPA Legislative Conference Hamilton Hotel, Washington, DC

NationalPawnbrokers.org/legislative-conference SPring 2018

National Pawnbrokers Association

business solutions

The

Tax Man Cometh How to Prepare for an Audit

National Pawnbrokers Association

Spring 2018

By Rob A n de rso n

t’s Monday morning and you have just sat down at your desk with that first cup of coffee, ready to tackle the mail sitting in front of you. As you casually sip your coffee opening various letters, you suddenly feel the blood drain from your face and feel sick to your stomach. You have received a letter from a taxing authority and there is some information they would like to obtain from you. For the purposes of this article, the taxing authority in question will be the Internal Revenue Service (IRS) as that agency seems to engender the greatest amount of hostility and fear. However, the principles discussed herein will apply to virtually all state or local taxing authorities. To begin with, let’s dismiss a couple of misperceptions about the IRS: 1. I t is Congress, not the IRS, that makes tax law. The IRS may issue revenue rulings or interpretations, but the agency is merely responsible for enforcing the tax laws passed by Congress and does not have the power to levy taxes. So, if you’re angry with a particular aspect of the Internal Revenue Code, you should talk to your congress person and not an agent of the IRS. 2. T he IRS is not staffed completely with individuals who enjoy wringing the life out of taxpayers. As with any profession, there are most likely a few curmudgeons who lend credence to the stories of the ill-tempered auditor, but for the most part, the agency is staffed with well-meaning professionals who are simply trying to do the jobs they have been assigned by Congress. There are currently four (4) types of audits that are conducted by the IRS: Correspondence Audits

This type of audit comprises roughly 80 percent of all the audits conducted by the IRS and are the lowest level and simplest to comply with. They can result from taxpayer error, such as failing to attach a specific form to a return, supporting documentation requests to substantiate certain numbers on the return, or as a result of IRS analytics programs that look for patterns and detect potential high adjustment items. These audits are always initiated by mail, never by Spring 2018

National Pawnbrokers Association

business solutions phone, and are expected to grow as a pilot taxpayer communications program goes mainstream. With this type of audit, the taxpayer will receive a Form 566 that provides a list of missing or requested documents needed to verify the accuracy of the return. To comply with the Form 566 request, you may be asked for copies of receipts, invoices, payments, or cancelled checks. As with any audit, you should review the information request with your accountant/tax preparer and ensure you have gathered all the requested information. Simply send the requested documents back with the Form 566 via certified mail to the IRS by the requested due date and this should put most matters to rest. A letter of compliance and release should follow within a few weeks. Office Exam/Audits

In this scenario, the taxpayer is asked to visit a local IRS office to meet with a Tax Compliance Officer (TCO). These audits are usually confined to individual returns and are focused on a limited number of issues that may involve a few hours or a few days of the taxpayer’s time. As with all other IRS audits, notice of the audit will come via mail and never by phone. The letter will come from the TCO who will also instruct the taxpayer as to what documents to bring to the field office. The taxpayer should consult with their accountant or tax preparation professional to ensure proper document collection. If, during the exam, the TCO requests additional documents or information, the tax payer will be provided time to supply the missing information. These audits are not full return examinations and are focused on specific issues that 26

have garnered attention. With both the Correspondence Audit and Office Exam/Audit, maintaining good records and documentation is the key to being able to provide the agency with the information requested and ensuring the exam process finishes quickly. Poor documentation and recordkeeping can turn a simple information request into a much larger examination of the tax payer and their business. I also recommend that the tax payer have their accountant (a licensed CPA preferably) represent them in person at the IRS office.

National Pawnbrokers Association

Spring 2018

Field Exams

These are the most comprehensive examinations and are conducted by a Revenue Agent (RA) who is typically a trained accountant with extensive tax experience. The RA will visit the taxpayer where the books and records are kept which may be the taxpayer’s home, place of business, or accountant’s office. In 2016, 23.6 percent of all audits conducted by the IRS were field audits as opposed to 76.4 percent that were correspondence or office audits. These examinations cover business returns (both large and small) and individual returns, especially those

that are tied in with a taxpayer’s business. They are not limited to an individual issue or small group of issues, and are very broad in scope. In order to prepare for this type of exam four things should be kept in mind: a. The taxpayer should have good records and documentation. If you cannot substantiate your numbers or methodologies, you will probably not fare very well during this type of exam. b. F or taxpayers using Peachtree, QuickBooks, or other forms of electronic accounting software, the IRS is allowed to and will request the data files. The RA is typically trained

on these software packages and will ask for the data files to import into his/her version of the software and will examine these records. The RA will perform tests, such as reconciling the income reported on the returns to the revenue records in the software or reconciling the bank statement inflows to deposits reported on the software. c. The taxpayer should not, under any circumstances, represent themselves in front of an RA. This would be like trying to represent yourself in a court of law and should not be attempted. The taxpayer should have their CPA or authorized enrolled agent represent them in front of a Revenue Agent. d. The taxpayer, through their CPA, can arrange to have the RA conduct the majority of the field work at the CPA’s office. While the RA may ask to visit the taxpayer’s place of business, the less time the RA spends at the taxpayer’s business, the better. A typical taxpayer who files a schedule C (which would be most single member LLC’s) should expect the following procedure during an examination: n P reparation of a personal financial analysis - lifestyle analysis of taxpayer and a cash in/cash out analysis n A n in-person interview n T our of the taxpayer’s business and website to gain knowledge of operations n E valuation of internal controls to determine reliability of books/ records and fraud potential n R econciliation of income from the tax return to the books and records n T est of gross receipts collected tying those numbers back to the SPring 2018

original books/records n T est for unexplained increases in

net worth n T est for unexplained deposits in business or personal accounts n P reparation of a business ratio analysis (i.e. inventory turns) for comparison against industry standards and look for discrepancies n D etermination of e-commerce activity and other internet activity TCMP Exams

The Taxpayer Compliance Measurement Program is the analytic-driven program used by the IRS to ensure that taxpayers are paying the taxes they are supposed to pay. The basis of this program is the Discriminant Inventory Function or “DIF” score. The DIF is used to identify tax returns for examination using a predetermined scoring formula. Each type of taxpayer and tax return is subject to a DIF score analysis and there are specific items on a tax return that may trigger a DIF score leading to an examination. Participation in certain tax shelters, large charitable contributions, home office deductions, large travel and entertainment expenses, or large automobile expenses may trigger flags within the scoring system that result in examination. Once a tax return is selected under the DIF program, it is then manually reviewed and evaluated. If the manual review confirms items that are of concern, the taxpayer can most likely expect a Field Examination with requests for documentation to verify or substantiate the items that were flagged.

National Pawnbrokers Association

business solutions n L arge casualty losses (uninsured

Audit Triggers

Certain items will trigger certain types of examinations. Typical items that will trigger a correspondence audit usually include an incorrect Social Security or EIN number on a return, failing to sign a return or forgetting to attach a specific form. Items that will trigger a more comprehensive exam can include: n L arge home office deductions n N on-cash charitable contributions n L arge business meal and entertainment expenses n B usiness auto mileage/usage in excess of normal standards

losses that are tax deductible) S chedule C business filers who report losses on their returns for a sustained period of time (several years) C hanging from a W2 employee status to Self Employed (within your owned company) U sing the loss carryback rules and offsetting prior year tax income with losses B usinesses with substantial e-commerce operations (In addition to online sales, is the taxpayer getting referral fees, selling customer lists, generating

advertising income?) n B usinesses that are cash intensive

(typically bars and restaurants, but pawn is cash intensive and the IRS is learning this) n S ub S corporations’ reasonable compensation (shareholders paying themselves little in wages, but large distributions, to avoid selfemployment taxes) General Audit Rules to Live By n T he IRS must complete an audit

and give you a report within three (3) years of the date you file your return. (Continued on Page 53)

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National Pawnbrokers Association

Spring 2018

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Pawn Expo

July 10-12, 2018 • The Mirage • Las Vegas, NV What is Pawn Expo? Pawn Expo is the only national convention and trade show for the pawn industry. Attendees learn new ways to strengthen their company, connect with fellow pawnbrokers, and do business at the trade show featuring over 100 different companies. Leave energized and equipped with the latest industry knowledge.

Save $170

by May 25 with early bird rates!

What’s New in 2018 Manager-level seminars Hands-on social media training Extended education sessions on luxury handbags and watches

PawnExpo.com 30

National Pawnbrokers Association

Spring 2018

Keynote Speaker Joey Coleman

Schedule Highlights

The Changing Face of the Customer:

Monday, July 9, 2018

How the Customer Will Be the Next

n Certified Pawn Professional courses

Great Disruptor in the Pawn Industry The shifting values, beliefs, and

(additional registration required) n Networking Reception

expectations of customers are bringing massive change to the

Tuesday, July 10, 2018

forefront of every industry. By

n Annual Membership Meeting and Breakfast

focusing on the evolving expectations of prospects

(Members Only)

and customers alike, an organization can weather the

n The Marketplace

change that is sweeping across the globe and even take

n Opening Session Keynote

advantage of these shifts in order to grow market share

n Human Resources for Managers seminar

and increase customer engagement.

n Joey Coleman: The First 100 Days - Creating Remarkable

Joey Coleman will present an informative and

Experiences Early in the Customer Lifecycle

interactive presentation designed to show attendees

n Management Is Not Leadership seminar

how the marketplace is being dramatically altered by the

n Welcome Reception

shifting expectations of all customers. Building on this analysis, he will teach attendees how to take advantage of this shift by creating remarkable experiences for their customers.

Wednesday, July 11, 2018 n Social Media – The Basics and Beyond,

a hands-on experience n Young Professionals Luncheon n Pawnbroker Networking Luncheon n 130-booth Trade Show

Thursday, July 12, 2018 n 130-booth Trade Show n 15 Federal Statutes – Compliance for Managers seminar n Pawnbroker Roundtables n In-depth seminars on luxury handbags and watches n Closing Reception

Hotel Information THE MIRAGE HOTEL AND CASINO, LAS VEGAS Pawn Expo 2018 Room Rate $127 per night, plus applicable taxes and resort fee of $22 per night Visit PawnExpo.com to make online reservations, or reserve via phone by contacting Group Reservations at (800) 6276667. Give the code PWN18A to receive the group rate.

The certified Pawn Professional (CPP) designation program has over 100 candidates pursuing their CPP certification. The designation will elevate professional standards and be the recognized mark of distinction among those in the pawn business. All courses

The group rate is available through June 22, 2018,

will be offered at Pawn Expo 2018.

based on availability.

Additional registration required.

SPring 2018

National Pawnbrokers Association

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National Pawnbrokers Association

Spring 2018

member benefits

And the Award Goes Toâ&#x20AC;Ś NPAâ&#x20AC;&#x2122;s Annual Awards Since 1996, the National Pawnbrokers Association has been giving out awards to those who have made an everlasting impression on the pawn industry. These hard working, dedicated individuals and companies, not only paint a picture of success for themselves, but for the

industry as a whole. They are leaders, innovators, and an inspiration to others in the business. The following awards will be presented at the Annual Awards Luncheon held during Pawn Expo in Las Vegas, NV, on Tuesday, July 10, 2018:

Pawnbroker of the Year Award

Industry Partner

Outstanding Community

Presented annually to an individual

of the Year Award

Relations Award

who, through his/her performance,

Presented annually to the NPA

Presented annually to an NPA

has demonstrated exceptional

Industry Partner member company

Pawnbroker or Affiliate member

success in their business and

who, through their performance and

company whose public service and/

local community and has made a

dedication, has shown significant

or voluntarism efforts advance the

significant contribution to the pawn

support of the association and its

standard and quality of life in their

industry during the previous year.

members.

community.

Young Professional

Outstanding Pawn Industry

Charles R. Jones Lifetime

of the Year Award

Image Award

Achievement Award

Presented annually to an individual

Presented annually to an NPA

Recognizes a pawnbroker who,

40 years of age or younger who,

Pawnbroker or Affiliate member

through his/her outstanding

through his/her performance, has

company who creatively generates

leadership and efforts, has gone

demonstrated exceptional success in

positive awareness of the pawn

above and beyond and made a

their business and local community,

industry through a print or digital

significant and lasting impact on the

and has made a significant

marketing campaign. Media includes,

pawn industry over the course of

contribution to the pawn industry

but is not limited to: television, radio,

their pawnbroking career. They are

during the previous year.

social media, print campaign, and

regarded by their peers as leaders

email campaign.

in the industry and recognized as such nationally. This is the highest honor awarded by NPA and is

If you would like to nominate a pawnbroker or a company for an

awarded only to individuals who have

award, you can find the nomination forms at NationalPawnbrokers.

demonstrated a lifetime commitment

org under the Membership tab/NPA Annual Awards.

to the association and to the success of the pawn industry.

SPring 2018

National Pawnbrokers Association

business solutions

Don’t Let Your Guard Down P

awnbrokers and jewelers aren’t one and the same, yet there are many similarities – especially in the minds of criminals. High-value merchandise can serve as a motive for criminals to target your business. Unfortunately, the industry overall has experienced a wave of criminal activity resulting in an especially turbulent past several years. If there’s one thing pawnbrokers and jewelers can learn from one another, it’s how to protect your businesses from criminal activity. This is particularly true when it comes to violent robberies, which have become increasingly prevalent. You can help prevent these crimes and increase your safety by considering information from the Jewelers’ Security Alliance (JSA) and implementing simple strategies recommended by Jewelers Mutual Insurance Group to increase your safety. Each year, JSA compiles data from jewelry-related crimes, which includes pawn industry statistics. To gain a better understanding of the threats facing your business, consider the information provided by their most recent report published in March 2017:

Violent crime plagues pawnbrokers and jewelers alike By John Fierst, Jewelers Mutual Insurance Group

National Pawnbrokers Association

WINTER 2017

Robbery By State

2015

JSA defines ‘robbery’ as “taking of property from a person by use of force or fear,” which in most cases results in either a “smash-and-grab” or an armed robbery. If you’re not familiar with smash-and-grabs, these robberies usually involve more than one person and can take place in less than 60 seconds. The perpetrators use sledgehammers to access showcases and proceed to take as much merchandise as possible and then quickly exit the business. While JSA reports that overall robberies dropped from 231 in 2015 to 174 in 2016, the number of smash-and-grab events only decreased by 10, from 72 to 62. What’s most concerning is that 26 of those 62 smashand-grab events featured more than just sledgehammers – guns were also present (a 73% increase in escalated gun-related incidents from prior year). In total, the charts speak for themselves with regards to guns used in robberies, as well as excessive violence:

2016

Are robberies becoming more violent?

California

18.2%

Texas

11.3%

Florida

8.2%

New York

6.5%

California

20.7%

Florida

10.3%

Texas

8.6%

Michigan

6.3%

North Carolina

6.3%

Robbery Events with a Gun 2014

2015

2016

36.5%

59.3%

61.5%

Robbery Events with Violence 2014

2015

2016

21.9%

27.3%

31.6%

While the geographic location of businesses is a strong signal for criminal activity, a business’s type of physical location can also signal criminal activity as detailed below:

Smash and Grab Locations Downtown Shop

Mall

The strong-arm tactics employed by criminals may offer an explanation as to why robbery dollar losses only declined by 9.7% between 2015 and 2016 ($26.8 and $24.2 million, respectively), as opposed to the 24.7% overall decrease in total robberies. An argument can be made that criminals are being more selective with their robbery attempts, employing a higher degree of violence in order to steal the most valuable merchandise possible.

Stand Alone

Pawn Shop

Strip Center

Where are robberies occurring?

The most populous states (California, Florida, and Texas) continue to lead the way with the most robberies. Interestingly enough, Michigan and North Carolina have become more active than New York.

Unknown 0 WINTER 2017

National Pawnbrokers Association

business solutions With nearly three times more smash-and-grabs than other locations, you don’t have to be a statistician to recognize that businesses located in malls are targets. Upon closer examination, you will see that pawn shops were victimized more than standalone jewelry stores. This may simply be an aberration, but it’s worth taking note and perhaps refreshing your security protocols.

Smash and Grab by month 9 8 7 6 5

When is robbery activity most active?

There are a few things worth taking into consideration here: nF igure 1 Stay vigilant early in the year. Retailers may be more relaxed after a busy holiday season. Criminals are not – be on guard 24/7/365. nF igure 2 Weekends don’t appear to be as dangerous as the latter part of the work week. Due to lower customer traffic, jewelers tend to be closed or have limited hours on Sunday and Monday. If your business is more regular, don’t assume this trend applies to you. nF igure 3 There’s more risk earlier in the day. Criminals target this time of the day because employees are often getting ready to display merchandise for the day and are not attuned to outside threats. It’s also worth noting that while smash-and-grab attempts decreased throughout the day, grab-and-run thefts (taking merchandise without force or fear) gradually increased.

How can you keep your business safe?

You can’t eliminate the possibility of a robbery at your business and you certainly can’t control whether a criminal carries a weapon. What you can do is educate your entire staff on the threat of robberies and implement procedures to lower the risk of an event taking place. Here are five key things every employee at your business should always follow: nK eep your doors locked while you are preparing your business for opening and closing. nO pen and close your business with at least two people present (one employee should focus on the surroundings of your business for suspicious activity). 36

National Pawnbrokers Association

Figure 1

2 1 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Smash and Grab by day

Nov

Dec

Figure 2

14 12 10 8 6 4 2

Monday

Tuesday

Wednesday Thursday

Friday

Saturday

Sunday

Smash and Grab by hour of day

Figure 3

9 8 7 6 5 4 3 2 1

Spring 2018

10-11 AM

11-12 AM

12-1 PM

1-2 PM

2-3 PM

3-4 PM

4-5 PM

5-6 PM

6-7 PM

7-8 PM

8-9 PM

9-10 PM

nD ocument and share suspicious incidents and persons

with a local crime prevention network as well as law enforcement. Nearly every crime is preceded by some degree of “casing” where criminals scout out a location before attacking it. nM eet and greet each customer as they enter your business. A consistent presence is a solid deterrent to a criminal who is casing. nU se code words or phrases if you want to alert your coworkers of something suspicious without tipping off a potential criminal. As demonstrated by the data collected by the JSA, it can be a dangerous world for jewelers, pawnbrokers, and anyone dealing in luxury goods. Knowing how criminals operate can provide insight into simple actions you can take to reduce the threat of robberies and other crimes. To read the JSA’s report and view recently reported crimes, visit JewelersSecurity.org. For more tips on robbery prevention and other security topics, subscribe to The Clarity Blog by Jewelers Mutual at info. jewelersmutual.com/clarity-blog.

Lastly, if all else fails and you find yourself in the midst of a robbery, the most important thing to remember is to never resist! Property and merchandise can be replaced, lives cannot.

* All information courtesy of Jewelers’ Security Alliance 2016 Annual Crime Report (http://jewelerssecurity.org/ crime-statistics/)

John Fierst is the Vice President of Commercial Lines at Jewelers Mutual Insurance Group. Jewelers Mutual is based in Neenah, WI, and offers both commercial and personal lines of insurance. To learn more, visit JewelersMutual.com.

THE TRENDZ

WE BUY

TURN YOUR DIAMONDS INTO CASH MELEES LARGE STONES BROKEN, CHIPPED, EVEN BURNT DIAMONDS as well as UNWANTED JEWELRY

SPring 2018

National Pawnbrokers Association

young pawnbroker to watch

Joel Levinson

Vice President, Dynasty Jewelry & Loan, Norcross, GA Years in the Pawn Industry: Off

Greatest Accomplishments in Pawn

Role Model: My father, Ben Levinson.

and on since I was 16; consistently

Career So Far: 2017 NPA Outstanding

He has taught me a lot when it comes

since 2009

Pawnbroker Image Award, Best of

to this business.

Gwinnett for Pawn Shop 2016. How I Got My Start in the Industry:

My Media Mix:

After college, my dad said you can

Industry Certifications Held: GIA

Musical Artists: Sister Hazel

live at home and work for me - or

Diamond Graduate Degree; working

Social Media: Facebook, Instagram

good luck. I figured I have never really

on my CPP

TV Shows: Game of Thrones, Netflix

had great luck, so I might as well go When I’m Not At Work, I: Enjoy being

to work!

outside and taking walks around Best Advice I Ever Received: Treat

town. My wife and I are foodies – we

people the way you want to be

love to eat, try new restaurants, and

treated. When you treat everyone

travel a lot!

with respect and dignity, they want to come back to you and do business

NPA Members Would Be Surprised

with you.

to Know That: I never wanted to be in the business growing up. After going

Top 3 Goals for 2018:

to GIA and continuing to learn a little

n Increase our sales and loan numbers

about a lot, I started to really enjoy it,

n Change the public perception by

and it became what I wanted to do.

gaining double the amount of 5-star If I Wasn’t a Pawnbroker, I Would:

reviews on Google n Continue educating myself and

Invent a product that people want

my employees on industry-

to have and that would make their

related knowledge to be

lives better.

better pawnbrokers

SPring 2018

National Pawnbrokers Association

compliance

Bank De-Risking and the Pawnbroker by Robert Frimet, CAMS

his is not a story about mythical creatures or sea monsters; itâ&#x20AC;&#x2122;s about something that just a few short years ago didnâ&#x20AC;&#x2122;t even exist. Bank de-risking, also known as bank discontinuance, is something very real. You probably know someone who has had their bank account closed, threatened to be closed, or threatened to have their PayPal account shut down or suspended. If this has not happened to you or someone you know, it may just be a matter of time. On a regular basis, I receive calls from clients about getting a 30-day closure notice from their bank or processors or, in the alternative, the bank asking for more and more information to keep the account open.

National Pawnbrokers Association

Spring 2018

So, what is bank de-risking and how can you, the pawnbroker, combat it? To fight the monster, you must know the monster. In a Wall Street Journal article (Account Closed: How Bank ‘De-Risking’ Hurts Legitimate Customers) going back to 2013-2014, J.P. Morgan Chase dropped more than 100,000 accounts because they were considered risky for money laundering. Between 2013 and 2014, Standard Chartered closed 70,000 small and medium-size business accounts, and ended hundreds of relationships with banks in Latin America and Central Europe. This number grows in mass even today. So why do banks and processors continue to take these actions? Let’s take a look inside the monster… GOVERNMENT FINES

Of course, banks are “for profit”. So, imagine if maintaining bank accounts puts the bank under a microscope and open to scrutiny. Now, when those banks are examined by their regulator, they are found to have promoted money laundering in some fashion or simply did not take the steps to prevent it. n1 1/2017: Lone Star National Bank - $2 million fine n2 /2017: Merchants Bank $7 million fine n1 /2017: Western Union $770 million fine These are but a few fines levied by FinCEN in 2017 and does not include fines levied by bank regulators, such as the FDIC, OTS, and OCC, which are in the millions and all for anti-money laundering policy and procedure violations. PROFITIBILITY

“I’m a small company, so why should the bank go after me? I am

not like those guys.” I’ve heard it so many times. If you think you’re a small company which you feel reduces your compliance risk, guess again. Ask yourself this: Would you rather deal with 100 top-end profitable customers who earned you $1,000 each per month or 1,000 customers who earned you $5.00 each per month each? My guess is not the latter. According to a KPMG Global Anti-Money Laundering Survey, 78 percent of compliance professionals in top global banks reported increases in the total investment in AML compliance, with 22 percent of those respondents indicating an increase of 50 percent during a three-year period. Translating that into concrete expenditures, Hong Kong and Shanghai Banking Corporation (HSBC) spent $800 million on its compliance and risk management program in 2014, an increase of $200 million from the previous year. So, being a small shop doesn’t help. Many have noticed that banks are increasing their costs which go toward supporting their compliance departments. Being a small shop doesn’t help matters and could lead to a quicker trip to the chopping block. PERCEIVED OR ASSESSED RISK

One sector that has traditionally been perceived as high risk are money service businesses (MSBs). MSBs are check cashers and wire transmitters. Though not MSBs, dealers in precious metals and pawn shops also feel the effects. Challenges in how those businesses conduct customer due diligence (CDD), amounts of cash handled, lack of regulatory oversite, the inability to determine source of funds from the customer, and single deposits to the bank from SPring 2018

combined customer transactions are but a few risks the banks face in maintaining bank accounts for these cash-intensive businesses. Then there is the perceived risk. Perception can be tricky and is what one believes it to be. Take “perceived threats” as an example. The bank may believe the pawn shop or precious metal dealer is a risk because the business deals with bullion that is not traceable to its original holder. It may then perceive the risk is too high for them to bank the client because of the risk to the bank in being able to oversee compliance on their level. It doesn’t matter if buying that broken chain and bracelet is about as risky as kissing your wife goodnight. The bank has cast that perception on you. REPUTATIONAL CONCERNS

No bank wants to be on the front page of the newspaper for doing business with a company that has been convicted of money laundering. In some cases, that reputational risk may be too much to bear for a conservative board of directors at a bank. There was recently a combination pawn and check cashing company. The check casher didn’t follow the rules in the state. They had to surrender their check cashing license and pay fines, but their pawnbroker license was left intact. Imagine when the bank gets wind of the license forfeiture. Because the company as a whole was fined, the bank may exit the entire business. No one wants the reputational risk of doing business with someone who gets shut down by a regulator. Banks also tend to follow the lead of other banks. If one bank closes a particular group, oh sorry, I mean “de-risks” a particular group, you can be assured that some other banks will follow suit “just because”.

National Pawnbrokers Association

compliance

OPERATION CHOKE POINT

Remember Operation Choke Point? Gone, but not forgotten! First made public in March 2013, Operation Choke Point was an initiative by the U.S. Department of Justice for investigating financial institutions doing business with industries deemed to be at “high risk” for fraud. According to a Justice Department official quoted in the Wall Street Journal, “We are changing the structures within the financial system that allow all kinds of fraudulent merchants to operate [with the intent of] choking them off from the very air they need to survive.” Myth: Operation Choke Point is dead. It’s also 80 degrees in New York City in December. It may be dead according to the government, but it’s still in form and function every day being carried out by banks on their clients. Just the other day, there was a client with an 800+ credit score, many years in business, 42

and great bank statements. They applied for a lease for $100,000 to purchase equipment and were approved in 24 hours, just to have a senior analyst at the leasing company say that because they were buying and selling precious metals, that they were on a “prohibited list” of companies and could not get the loan after all. In another example, a company sold phone cards. The compliance officer, who was new, said that phone cards could be used to launder money by purchasing large amounts and reselling them for cash even though the cards could only be used to load a phone, and so the company’s account should be closed. Preposterous? Yes! A true story? Yes! So, though officially killed by the government, Operation Choke Point is still being carried out every day by banks and processors. What’s still on the chopping block? Check cashers, gun shops, precious metals dealers, and the like. Same choking, different choker.

National Pawnbrokers Association

Spring 2018

GOVERNMENT SAYS ONE THING, DOES ANOTHER

Although financial institutions have found themselves at the center of the de-risking debate, they have been reluctant to speak on or off the record about their handling of the practice. The resulting ambiguity has led to further confusion about how the customer base can best adapt practices to avoid being de-banked. Regulators have been “asleep at the switch” for years and are now trying to catch up by shifting the regulatory burden to financial institutions. There is a growing fear of “getting it wrong” among working-level compliance officers that has helped foster declining risk appetites, particularly over the possibility that compliance officers will now be held personally liable as corporate responsibility shrinks away. Profitability is a driving concern for de-risking practices: it is simply “not worth the hassle and costs” to engage with this customer base.

We are kind of in a Ping-Pong match between financial inclusion and avoiding regulatory scrutiny and we are the ball.” —Pamela Dearden, managing director for financial crimes enforcement at JP Morgan Chase (quoted from a recent study on bank de-risking.)

WHAT TO DO

I have preached for years as to having open communication with the bank, having a solid AML program in place, conducting internal monitoring, independent reviews, and training as well as written risk assessments and sharing those with the bank. So many still have that “don’t tell, don’t ask” mentality. If I stay under the radar, my bank will leave me

alone. Out of sight, out of mind. Well, consider that the less the bank knows about your practices, the more likely they are to close your account. Another myth: “I won’t conduct an independent review or draft a policy concerning my Anti Money Laundering compliance until the bank audits me.” I compare that to, “I won’t pay my taxes unless I get audited by the IRS.” This, too, is likely to get the pawnbroker in hot water with their bank. If they cannot show a history of ongoing compliance, then why should the bank take the risk because the pawn broker was “reactive” instead of “proactive”? It’s like eating healthy after you have a heart attack, but eating 15 slices

SPring 2018

of bacon per day prior. Pawn stores, particularly those who deal with precious metals, must take a proactive stance and comply with the regulations and have open communication with their bank to even stand a chance of beating the rising tide of bank de-risking. Robert Frimet is a certified anti money laundering specialist (CAMS) and conducts independent reviews, conducts trainings and drafts AML (anti money laundering) policy and procedures for MSB’s, Dealers in Precious Metals, bitcoin company throughout the United States. He can be reached at bob@checkconsultants. com, checkconsultants. com, or (866) 204-7209

National Pawnbrokers Association

community involvement

Gift Day 2017 Pawnbrokers rise to the challenge supporting Musical Instrument Gift Day NPA members donate musical instruments and financial support to the Mr. Holland’s Opus Foundation and Music Rising The National Pawnbrokers Association (NPA) celebrated its ninth annual Musical Instrument Gift Day, where pawnbrokers from around the country made donations to organizations in need. Monetary donations have been made by members of NPA to The Mr. Holland’s Opus Foundation, as well as new and gently-used musical instruments. Additionally, pawnbrokers have made charitable contributions to various community and student organizations in honor of Gift Day. After schools across the country faced an unprecedented surge in natural disasters and rising waters from hurricanes, Gift Day and The Mr. Holland’s Opus Foundation directed their efforts toward a new initiative, Music Rising. Originally launched in 2005, Music Rising was created to rescue the musical culture of the Central Gulf region of the U.S. from the destruction caused by the catastrophic hurricanes Katrina and Rita, by replacing the musical instruments lost or destroyed in the deluge. Financial setbacks and budget shortages in recent years have left music programs in serious trouble, depriving thousands of children the opportunity to study music or take part in concert and marching bands at school. Cofounded by U2’s the Edge and legendary producer Bob Ezrin, the organization continues to aid schools affected by natural disasters nationwide.

The NPA would like to thank the following members for their financial donations: n Larry Nuckols, Brittex Financial n Ben Levinson, Dynasty Pawn n Chris McCarthy, Lowell Jewelry & Loan n Dave Reduzzi, D & R Pawn & Jewlery n Crown Pawnbrokers n Uncle Dan’s Pawn Gun & Archery n Rock Road Loan & Jewelry n Arlington Jewelry & Loan n 3 Click Media, on behalf of the National

Pawnbrokers Association nA dditionally, Eric Modell of Modell Pawn Collateral Loans,

Inc. came forward with a generous donation of musical instruments, including various saxophones, flutes, and clarinets.

For nine years, Gift Day has worked alongside a number of organizations, including veterans hospitals, Boys & Girls Clubs, and state governments, to raise tens of thousands of dollars in cash and musical instruments. More recently, the NPA has worked with the Mr. Holland’s Opus Foundation to target flailing school band programs and help transform them into thriving successes.

Musical Instrument Gift Day encourages NPA members to make a difference, not just on December 6th, but year-round. Donations of cash or musical instruments are always welcome and can be made directly to The Mr. Holland’s Opus Foundation. For more information, visit GiftDay.org and click the “Donate Now” link.

National Pawnbrokers Association

Spring 2018

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National Pawnbrokers Association

multi-store owner profile

Inside All That Glitters SE Division street location in Portland, OR

A Little Glitter Never Hurt Over half of all NPA pawnbroker members are part of a multi-store operation. To get a closer look into all the decisions that are made on how, when, or if you should expand your pawn business, we will be featuring a series of articles on pawnbrokers who own more than one store.

regon is home to a number of recognizable names: Oregon Ducks, Oregon State Beavers, Mount Hood, Pendleton, and a five-store pawn operation called All That Glitters Jewelry and Loans. This family-owned business opened its first store in Portland in 1988. Since that time, they have added four more stores in Tigard, Milwaukie, Salem, and Albany, all operated with a staff of 40. In 1993, Steve Souza’s family needed help running their two stores in Portland. Steve had just completed

National Pawnbrokers Association

Spring 2018

four years of service in the Air Force, so he offered his services to the family business. He is now the company’s general manager. When asked how to know when it’s time to open a new location and where that location should be, Steve says, “We have opened up additional locations

based upon availability of the buildings and the need for a pawn shop in the area. When deciding where to open up additional locations, we consider the physical location, cross traffic, accessibility, competition, and building size.” Keeping operations running smoothly across five locations and 40 employees takes a lot of coordination. The company’s primary obstacles are maintaining consistent procedures and ensuring constant and clear communication between the store managers. Steve calls each store manager daily Monday through Friday (and sometimes weekends) to discuss any issues they may be experiencing. He also makes a weekly face-to-face visit at each store. The company holds management meetings to inform employees about operating procedures, policies, regulation changes, sales events, and to discuss any problems. All That Glitters uses a number of different marketing avenues to promote their pawn business. They currently advertise on television (running commercials on local stations), radio, and Facebook. “All of our locations have a Facebook page and use this avenue to advertise new and special merchandise, offer collateral loans, and inform our customers of our special events. We send out emails informing customers of our VIP sales events. We also promote All That Glitters through reviews with Google since many potential customers use this avenue when searching for alternative loans,” he says. As with many companies, and pawn stores in particular, finding good employees can be a long and arduous process. When reviewing applicants, Steve prefers longevity. “We look for candidates who have previous employment of two or more years with one employer. This is a good indication they will be successful with our company. It’s very time consuming and expensive to train employees. Currently, 20 percent of our employees have been employed with All That Glitters for 10 years or more. 70 percent of our employees have been with us for at least two years. We also look for

Peggy Dubal, Administrative Director; Steve Souza, General Manager

“It’s very time consuming and expensive to train employees. Currently, 20 percent of our employees have been employed with All That Glitters for 10 years or more. 70 percent of our employees have been with us for at least two years.” - Steve Souza

candidates who are friendly and have good customer service skills.” The company gives back to the local community in a rather unique way. They provide free produce in the summer and free Christmas trees in December. The company owners have a nearby farm where they grow corn, tomatoes, cucumbers, and other produce. Once a week, in August and September, they bring in the produce and offer it free of charge to the community. They SPring 2018

National Pawnbrokers Association

multi-store owner profile

do the same with Christmas trees during the holidays. They also donate to the Elks, local veterans, schools, and various educational organizations. Being a member of NPA has allowed Steve to “network with other pawnbrokers to identify issues within the industry, such as trends with loans, sales, hiring practices, and employee compensation.” He’s also able to get their opinions on topics such as, counterfeit items, fake gold, policies, regulations, suppliers, and references. While it’s impossible to forecast what the future will hold for the pawn industry with the many changes in government regulations, All That Glitters’ goal is to continue to provide the community with their fair and friendly services.

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National Pawnbrokers Association

Spring 2018

Diam INC.

An All That Glitters sales associate stands by ready to make a loan.

Stephen Foster President Fresno Coin Gallery California Pawnbrokers Association Board of Directors

“We have had great experience selling our diamonds to Simplex Diam. They consistently offer fair prices and buy most of our goods. We find them easy and enjoyable to deal with no matter what the market condition.”

letter to the editor

(From Page 6)

Thanks, Uncle Jimmy

a beautiful office where they wrote pawn loans by appointment only. They did mostly high-end loans and worked primarily on referrals. This is where I learned about the pawn business. I would vacation in Florida a few times a year and would spend days hanging out in their office, gathering every bit of knowledge I could. I continued to buy from their scrap gold for resale in the steel mill, and now armed with my GIA education, I moved into diamonds. They ran the pawn shop for just over ten years and then decided to “retire” to the life of vest pocket diamond dealers. Despite my aunt battling brain cancer, and eventually having to be moved to assisted living, they ran the diamond business up until Jimmy’s death in February. By that time, I had been out of the steel mills for 18 years and had owned my own pawn shop for over 15 years. This brings me back to the “MRBC” on the diamond paper that Jay found so odd. My cousin, Shaun, was in charge of handling her father’s estate which included the diamond business. I volunteered to help her with settling any memo goods that were still out and unaccounted for. She gave me his memo books, and hand written on the first page, the very first diamond was a MRBC 1.50ct GIA. When I saw that, I couldn’t help but think about my encounter with Jay years before. I always knew that my uncle was teaching me, but never realized how much his influence would be felt in my business almost 30 years later. While I was in my 20s, he taught me to use “MRBC” on diamond papers. It was most useful in the late 80s and early 90s, when we were buying a lot of European cut stones; this way we knew it wasn’t a European cut without having to open the diamond paper. He would always call the stone by its “full name.” It always sounded special when he showed a

customer a “Modern Round Brilliant Cut Diamond.” I looked up to Jimmy and saw his success, so why would I change what worked? Looking back now, “MRBC” is a silly thing to do considering we would always mark European cut diamonds with an E on the paper. That’s just the way Jimmy did things. I look around my shop today and realize that a lot of who I am, and what my shop is today, is because of Jimmy’s influence. Another example of this is a laminated card hanging on the employee side of the pawn windows. The card has the millimeter spread of what a diamond should be: 5.2mm =.50ct, 6.5mm= 1.00ct, etc. Measurements range from 1.0mm to 11.2mm. When other pawnbrokers and dealers have asked me for a copy, I have always given them one. Jimmy gave me that card in the early 90s, and to know that it is still being used by my staff and the staff of other pawn shops, would make him proud. I hope you take a moment to reflect on those who have put you on the path to success and independence in the pawn business. Thank them if they are still around. If it hadn’t been for my aunt and uncle’s little shop in northwest Indiana, my life would have been completely different. They will forever be “MRBC” to me. Thanks, Uncle Jimmy! James Jarleth Martin (1940-2017) Mr. Kelly J Swisher President Illinois Pawnbrokers Association

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National Pawnbrokers Association

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National Pawnbrokers Association

Spring 2018

27th ANNUAL MIDWEST PAWNBROKERS CONVENTION

MAY 18 -20, 2018 THE GALT HOUSE HOTEL LOUISVILLE, KY EXHIBITORS

The FINEST vendors to the trade will be exhibiting their best goods & services. Come spend time with the companies you will WANT to do business with.

LOWEST PAWN CONVENTION REGISTRATION FEE

OPEN TO ALL PAWNBROKERS AND LIKE BUSINESSES

$99.00

SCHEDULE OF EVENTS FRIDAY P.M. - WELCOME COCKTAIL PARTY There will be a complementary cocktail party at 5:00 p.m. A time to make new friends and renew old acquaintances.

SATURDAY 5-19-18

8:00 a.m. - 9:00 a.m. SEMINAR 9:00 a.m. - 10:00 a.m. SEMINAR 10:00 a.m. - 11:00 a.m. SEMINAR11:00 a.m. - 12:00 p.m. SEMINAR 12:00 p.m. - 4:00 p.m. Exhibit Hall Hours 12:00 p.m. - 1;30 p.m. Lunch (IN OR NEAR EXHIBIT HALL) 4:00 p.m. - 5:00 p.m. SEMINAR 6:00 p.m. - Cocktail Reception/Banquet 7:00 p.m. - Keynote Speaker 8:00 p.m. - Live Auction to Benefit State Associations

SUNDAY 5-20-18

8:00 a.m.-9:00 a.m –SEMINAR 8:00 a.m. -Breakfast /EXHIBIT HALL OPENS 11:30 a.m..- $1000 Drawing 11:30 a.m.- Exhibit Hall Closes 11:30 a.m- State Association Meetings

LOWEST PAWN CONVENTION REGISTRATION FEE OF $99 1. 2. 3. 4.

INCLUDES: Friday Welcome Cocktail Party. Saturday lunch, evening cocktail party, banquet, keynote speaker, and auction. Sunday breakfast. Admittance to all seminars, exhibit hall, state association meetings, and other surprises. CONVENTION HOTEL THE GALT HOUSE HOTEL 140 N. FOURTH STREET LOUISVILLE, KY 40202

For Reservations: 502-589-5200

(Convention Room Rate $134.00) FOR MORE INFORMATION AND REGISTRATION FORM CONTACT

RON STEMPKOWSKI – TELE – 219-261-3173

EMAIL – 1IPA@COMCAST.NET

ALL CONVENTION ATTENDEES SUBJECT TO APPROVAL BY MANAGEMENT

member benefits

National Pawnbrokers Association New Members November 1, 2017 • January 31, 2018 PAWNBROKERS California Atlas Loan & Jewelry Co, Inc • Bellflower Central Jewelry & Loan • Ontario Chicago Loan Company • Beverly Hills E Z Jewelry & Loan, LLC • Westminster King’s Jewelry and Loan • Los Angeles Platinum Jewelry & Loan • Baldwin Park Western Loan & Jewelry • Los Angeles Colorado First National Pawn • Grand Junction Florida Paradise Pawn Tampa LLC • Ruskin Paradise Pawn Tampa LLC • Tampa Pawn Max 9 • Tampa Georgia Port City Pawn Shop Inc • Garden City Illinois Monster Pawn Peoria Inc • Peoria Indiana Jay County Pawnbrokers • Portland Kentucky Layton’s Pawn • Mount Sterling Nebraska Francis Pawn • North Platte Nevada First National Pawn, LLC • Las Vegas, NV New York Empire Pawn of Nassau, Inc • East Meadow North Carolina Coins & Stuff • Highpoint National Jewelry & Pawn, Inc #13 • Winston-Salem National Jewelry & Pawn, Inc #14 • Gastonia National Jewelry & Pawn, Inc #15 • Greensboro National Jewelry & Pawn, Inc #16 • Burlington Rhode Island The Gold Loan Co • Woonsocket Texas Frisco Jewelry & Loan • Frisco Independent Pawn • Porter Legacy Pawn Shop • Lewisville Paris Jewelry & Loan • Paris Top Cash Pawn • Plano West Virginia Cashland Pawn II • Clarksburg Jewelry Gold & Pawn • Huntington

INDUSTRY PARTNERS Leaderato • Chula Vista, CA

National Pawnbrokers Association

Spring 2018

book corner

Bridging the Soft Skills Gap

by Bruce Tulgan

How to teach the missing basics from today’s young talent You’ve just hired a great new young employee full of fresh ideas and a new perspective. They’re eager to learn and have all the right technical skills, but…they don’t always arrive on time, have no clue how to draft a memo or write a report, their professional behavior is lacking, and they always have their phone in their hand checking social media. Sound familiar? Today’s owners and managers are finding these to be some of the biggest problems with the new workforce. Bruce Tulgan, founder of Rainmaker Thinking, has spent decades researching generational changes in the workplace. In his book, “Bridging the Soft Skills Gap”, he shows you how to teach those soft skills, like professional etiquette, time management, and teamwork by using 92 step-by-step lesson plans. As an employer, you can guide and coach your young staff on how to make better decisions and be a better employee. Young workers want to learn. They want to feel productive and be part of the team. Some just need to be taught how.

(From Page 28)

The Tax Man Cometh n D o not use Facebook or social

n n n n n

media to broadcast any information about the exam or that an exam is underway. A sk to speak to the agent’s supervisor if you feel that you are not being treated fairly. A nswer questions as concisely as possible. D o not volunteer any additional information that was not asked for. D o not lie to the agent. R espond to all requests quickly. I f you sense things are not going well, stop the audit and consult with your CPA and/or attorney before continuing.

Audit Roulette What Are the Chances?

For the year 2016, the Internal Revenue Service Data Book Table 9B indicates the following chances of a return being audited:

Adjusted Gross Income

2016 Returns Audited %

$75,000-$99,999

.52%

$100,000-$199,000

.62%

$200,000-$499,999

1.01%

$500,000-$999,999

2.06%

$1M-$4,999,999

4.60%

$5M-$9,999,999

10.46%

10M+

18.79%

No one likes an audit or the feeling that someone is looking over their shoulder. However, with good records, guidance and representation from a professional, such as a CPA, and truthful answers that are provided in a timely manner, getting through SPring 2018

an audit does not have to be a Maalox-inducing event. The majority of taxpayers who are audited typically do not see the IRS again for several years, if at all, whereas those individuals who are more aggressive in their compliance with tax law tend to be visited more frequently. My advice always is to avoid anything that does not pass the smell test. Any tax reduction ideas should always be vetted by a professional accountant who is willing to represent you in the event the idea does trigger an audit flag. Rob Anderson is CFO for R & R Pawn and holds professional accounting certifications in both the U.S. and Canada. He is an Indiana CPA Society award winner for Leadership in Technology and serves as Treasurer of the NPA and chair of the NPA Finance Committee. He is also Treasurer for the Indiana Pawnbrokers Association and an Advisory Board Member for St. Elizabeth Coleman Pregnancy and Adoption Services.

National Pawnbrokers Association

state news

State Association Updates

ARKANSAS

Tim Collier, President Arkansas Pawnbrokers Association tim@pacerltd.com

The Dixie Pawnbrokers Trade Show and Educational Conference is coming to Little Rock, AR, and we couldn’t be more excited. On Friday, April 13, 2018, we will begin at 8:00 am with a pawn shop tour of four different stores and a trip to historic Oaklawn Racing & Gaming. We will return at 4:30 pm just in time for the opening reception in the exhibit hall. For those earning their Certified Pawn Professional (CPP) designation, the Product Knowledge course will be offered on Friday as well. Saturday, April 14, brings a seminar on lab-grown diamonds and how to detect them. Increase your awareness of this new rage in jewelry with hands-on samples. You won’t want to miss Yigal Adato and his workshop “Unlock the Leader - 10 Keys to Make More, Stress Less, and Have More Free Time While Working at the Pawn Shop.” The trade show opens after lunch, so bring your diamonds to sell. Look through all the merchandise to stock your shelves after the tax return sell-off. Saturday evening, we will have a dinner and a drawdown raffle (coordinated by the Alabama Pawnbrokers Association), which also raises money for the Dixie states. In addition, all pawnbrokers are encouraged to donate anything for the auction which raises money for all the states in the Dixie Association. 54

National Pawnbrokers Association

Spring 2018

The Louisiana Pawn Brokers Association is in charge of the auction. Anything donated by Arkansas pawnbrokers will keep money in Arkansas as well as anything bought by Arkansas pawnbrokers. On Sunday, April 15, we’ll have two more seminars, four state-specific meetings, and one final chance to visit the vendors on the trade show floor for any business you weren’t able to conduct on Saturday. One seminar is on regulatory requirements from the Anti-Money laundering Act and Bank Secrecy Act with Phil Hull, a former IRS agent. The second is with NPA President, Tim Collier, and the NPA legislative liaison, Fran Bishop, to cover what’s happening with the Military Lending Act and bank discontinuance. Don’t miss this great educational opportunity wrapped around a trade show.

OHIO

Raphael Tincher, President Ohio Pawnbrokers Association raph@tedspawn.com

The Ohio Pawnbrokers Association will hold its membership meeting and continuing education seminar on Sunday, April 22, 2018, at the Quest Conference Center in Columbus, Ohio. This will be a 4-hour continuing education (CE) offering and will be our last one before the end of the current licensing period. Details and registration materials will be mailed and emailed in advance.

OREGON

Josh Oller Oregon Pawnbrokers Association josh@pawntalk.com

We have had two exciting events recently in Oregon. The first was the collaboration between the Washington and Oregon Pawnbrokers

Associations to get information out about a $750,000 jewelry heist at Ben Bridge in Seattle on December 22. Because of the associations’ communication efforts, the manager at Silver Lining Jewelry and Loan in Portland, OR, Laura Furtado, was able to identify one of the Rolex watches taken in the heist. She and Josh Oller, owner of the store, coordinated with the Gresham Police Department to have the person arrested. Additional watches were found in the suspect’s car and hotel room. Secondly, Tim Barnes, owner of Tigard Pawn 4 More in Portland, displayed quick thinking after identifying a man who had been scamming pawn stores across the county with fake high-end watches. He was able to stall the man until Tigard police could arrest him.

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Spring 2018

calendar of events

APRIL 2018 Dixie Conference & Trade Show April 13-15, 2018 Marriott Little Rock Little Rock, AR Contact Tim Collier: Tim@Pacerltd.com NPA Legislative Conference April 24-25, 2018 Hamilton Hotel Washington, DC Contact Dana Meinecke: Dana@NationalPawnbrokers.org

MAY 2018 Midwest Pawnbrokers Conference and Convention May 18-20, 2018 Galt House Hotel Louisville, KY Contact Ron Stempkowski: 1ipa@comcast.net

JULY 2018 Pawn Expo 2018 July 10-12, 2018 The Mirage Hotel & Casino Las Vegas, NV Contact Helen Moore: pawnexpo@NationalPawnbrokers.org PawnExpo.com

index of advertisers 2018 NPA Legislative Conference 23 (817) 337-8830 NationalPawnbrokers.org/legislativeconference 3 CLiCk Media 56 (212) 365-0691 3clickmedia.com Aagam Creation LLC 29 (248) 961-0506 ABC Diamond Buyer 60 (586) 354-7274 abcdiamondbuyer.com Atish Diamond 14 (212) 938-1005 Bluestone Trading Company Inc Back Cover (888) 800-BLUE (2583) bluestone-trading.com Bravo Pawn Systems 58 (888) 407-6287 bravopawnsystems.com Certified Pawn Professional (CPP) 20 (817) 337-8830 nationalpawnbrokers.org Di-Moksh Diam, Inc 32 (213) 479-3023 dimokshdiam.com Diamonds and Jewelry Services 12 (973) 303-8389 Garrett Metal Detectors 45 (800) 527-4011 garrett.com Geib Refining 56 (800) 228-4653 geibrefining.com Gemological Institute of America 16 (800) 421-7250 gia.edu Hoover & Strong 3 (800) 759-9997, ext 164 hooverandstrong.com International Gemological Institute Inside Front Cover igionline.com Mid-States Recycling & Refining 32 (800) 551-0083 midstatesrecycling.com Midwest Pawnbroker Convention 51 (219) 261-3173 midwestpawnconvention.org

Padmavati Exports Inc 22 (212) 869-0544 padmavatiexportsinc.com Palak Diam 7 (213) 228-0077 palakdiam.com Pawnbroker Financing 28 (303) 373-1300 pawnbrokerfinancing.com Paysouth Merchant Services 38 (617) 578-9444 paysouth.com/partners/npa Rapaport Auctions 18 (212) 354-9100 rapaportauctions.com RMF Consulting Group 56 (866) 204-7209 checkconsultants.com Saumil Diam 45 (212) 575-3655 saumildiam.com Shri Diamond Inc 43 (212) 840-0650 Simplex Diam Inc 48 (212) 883-0888, ext 1007 simplexdiam.com Sparkle & Dazzle LLC 52 (212) 789-9088 sparklendazzle.com Stallcup Group 15 (817) 479-3880 stallcupgroup.com Star Buyers, Inc 21 (201) 720-1000 starbuyersinc.com Stuller, Inc 50 (800) 877-7777 stuller.com Surya Capital LLC 16 (800) 242-7766 diamondmelle.com The Trendz 37 (866) 337-7464 thetrendz.biz United Precious Metal Refining, Inc. 5 (800) 999-FINE (3463) unitedpmr.com Wexler Insurance Agency Inside Back Cover (800) 432-1853 wexlerinsurance.com Worldwide Diamond 55 (213) 622-2191 wwwdiamond.com

The NPA does not specifically endorse any entity including but not limited to exhibitors and advertisers; makes no representations, warranties, or guarantees; and assumes no responsibility for the products or services provided by these entities. The NPA expressly disclaims all liability for damages of any kind arising from the use or the performance of the products or services provided by these entities.

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An Aerial View by Rudy J. Klancnik

just finished a biography on the Wright Brothers. Yeah, yeah, I feel you judging me for bringing up that I just finished reading a book. That’s like telling everyone how much charity work you do or how many times each week you go to bible study. (For the record, I just finished up 120 hours of community service and I usually lead bible study four nights a week.) Anyway, back to Orville and Wilber. Those fellas changed all our lives by being brave enough to launch themselves into the sky where literally hundreds of others had tried and failed – and more often than not, died. Manned flight is without question a miracle of modern times. Then why is that almost no one standing around me at Gate 10 in Terminal D looks like they’re marveling at this miracle? Most of

us don’t really appreciate the miracle of flight at all. We’d rather complain about security lines, flight delays, missing luggage, and body odor on the fella in 24C. Just disregard the fact that we’re sitting in a steel tube that’s moving at 500 miles per hour while binge watching “Breaking Bad” on our iPads en route from Dallas to Los Angeles in just under three SPring 2018

hours. I just defined a miracle, folks, and none of us past the age of 12 appreciate it. What other “miracles” do we take for granted? Too numerous to list all of them here since they give me one page vs. 21 pages, but I’ve put together some highlights: How about the navigation system on our smartphone? Surely, we’d never complain when our Google Maps led us in a direction that took five minutes longer than we preferred. Oh, wait, we would definitely complain about that. Do you even remember how to fold the city or state maps in your glove box? Do you even remember what a map printed on paper looked like? The absolute genius of Google Maps (and other apps like it) cannot be overstated. How about transportation in

National Pawnbrokers Association

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info@ABCDiamondBuyer.com | Detroit, MI | 586-354-7274 | www.ABCDiamondBuyer.com Broken, Chipped or Damaged

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Diamond ad H.indd 1 60ABC Pawnbrokers Association | National

Baguettes & Single Cut

Spring 2018

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