City police are investigating a Southwest Baltimore auto dealer who allegedly operated a pawnbroker business that accepted cars as collateral for cash loans.
An undercover police lieutenant from the Criminal Investigation Division yesterday went to Variety Auto Brokers Inc. in the 1800 block of S. Caton Ave. and seized records after agreeing to pawn his 1988 Mustang convertible for $3,000.
Under the terms of the loan, the detective would have until the end of the month to pay a total of $3,600 -- a figure that includes $600 in interest -- or risk having the car sold to satisfy the loan.
The dealership's owner -- who declined to talk with a reporter -- had refused to give the lieutenant a larger loan on the specially equipped car which police valued at about $30,000.
Lt. Eugene T. Yeager of the Criminal Investigation Division said that no charges were lodged against the owner and that information regarding the transaction and the pawning of a 1985 Cadillac by another person will be turned over to prosecutors to determine if any charges should be lodged.
"He [the dealer] said he didn't realize he was breaking the law," Lieutenant Yeager said.
To accept vehicles legally, pawnshop operators who take in five or more vehicles must obtain an auto dealer's license from the state, city police said.
In Baltimore, car dealers who issue loans using cars as collateral must also possess a pawnshop license, city police said.
While the Southwest Baltimore car dealer had a license to sell cars, he did not have a pawnshop license, Lieutenant Yeager said.
Lieutenant Yeager said that pawnshop operations are closely regulated and businesses must report their daily transactions to police daily to make sure they are not accepting stolen items.
An investigation into the dealer's activities began in early March when he placed a small advertisement in The Sun seeking customers who wanted to pawn their vehicles.
One city pawnshop operator said he was not so sure that pawning of vehicles would be all that profitable.
"We looked into it a while ago," said Don Fox, operator of Steve's Market Brokers Inc. in the 2300 block of E. Monument St. "But it was such a hassle. We didn't want to get into it. You had to get a dealer's license and have a place to store and inspect them [the cars]."
Reeling from the recession, some people have resorted to pawning cars here and in other parts of the nation.
In Florida, cars, motorcycles and boats are displayed in pawnshops housed in large buildings that look much like supermarkets.
One person in Prince George's County even pawned his house in order to get some quick cash, according to police.
"If your business is on the downside or if you have lost your job and need money quickly, you give up something like that," said Tracy Wells, a Prince George's County pawnbroker. "This is quicker than going through a bank."
Since December, she said, her pawnshop has taken in 10 cars and several motorcycles.