Tabach-Bank is the current owner and CEO of both Beverly Loan Company, in Beverly Hills, and New York Loan Company, in Manhattan.  For over 75 years his family has specialized in confidential collateral loans against diamonds, gold jewelry, and fine art.  Tabach-Bank put his pop knowledge to good use on this episode of Braindex, hosted by Alex Bragg, and ended with one of the highest scores in the application’s history.

“Competing on Braindex was a blast and nice departure from running the two most high end pawn shops in the United States.  I was relieved to have scored at the top of the charts,” said Tabach-Bank. 

The free application’s recent episode features Tabach-Bank answering a series of trivia questions of varying difficulties ranging from the idiot question to the genius question.  Each Braindex episode allows viewers to watch a TV-quality game show while playing along in real time by interacting with their touch-screen.  Players of the application can compete as if they were in the studio with the celebrities, and as the developers announce on their website, ‘Don’t just watch a game show, compete on a game show!”

To verify the identity.  The first thing the certified gemologists at Beverly Loan Company will do when a potential client brings in jewelry to sell or loan against is to look for a hallmark and make sure that the jewelry is authentic and not a reproduction.  There are many questions they may ask themselves to find this out: is the gold of the correct karat for that particular company and are the diamonds and color stones the appropriate quality one would expect from a signed piece of jewelry?  Also, does the signature match the era that this piece was supposedly created?  Many aspects of verification go into identifying luxury jewelry, and the signature on the jewelry itself is a very reliable way to make sure it is truly what it claims to be.

To signify the care put into creating the piece.  Signed jewelry is just that; it has the signature of the maker which says, “I stand by this work, and put my name on it”.  There is a standard of craftsmanship in luxury brands, from the iconic yet common Cartier “Love Bracelet” all the way to a one-of-a-kind custom designed David Webb piece. When you buy signed jewelry, you are buying the level of quality that is associated with that brand.

“Our staff has years of training and experience in the appraisal of fine jewelry, including the ability to recognize signed goods.” says Jordan Tabach-Bank, CEO of the upscale pawn shop Beverly Loan Company.  “Whether you are bringing in a signed item for a collateral loan, or looking to purchase jewelry from our showroom, a signed piece helps to ensure that the value will remain as time passes.”

Owning signed jewelry has many advantages, but what is most important is the satisfaction of knowing that you own a carefully created work of art made to last.

1. Craftsmanship. A signed watch indicates the care that the watchmaker has put into the piece. Brands like Rolex, for example, are known for their dedication to the art of watchmaking, and create timepieces that are literally designed to last lifetimes. When a piece is signed with the Rolex name, you can expect a level of excellence in the craftsmanship that is associated with that brand. It is a calling card that travels with the watch, letting you and everyone that sees it know that you are wearing a work of exceptional quality.

2. Authenticity. Although the signatures on watches are often faked, watch experts are able to authenticate those that are genuine through a number of factors including movements and serial numbers. Collateral lenders like Beverly Loan have gemologists and watch experts that examine each piece that enters their upscale pawn shop to ensure that what is seen on the outside is exactly what they are selling, purchasing or loaning against.

3. Identification. Companies change their signatures over time as new watchmakers and designers come and go. Something as subtle as changing the B in Bulgari from a capital to a lower-case letter can help identify the year that a piece was made. As these vintage luxury watches come to Beverly Loan, their experts examine each piece to ensure that the signature on the watch matches the signature of the time period in which the watch was created.

Luxury watch companies put extraordinary care and dedication into creating each timepiece and it shows in their quality and durability. Consider buying a signed watch not only because of its reputation and value, but for the security in knowing that you have the maker’s stamp of approval. And this stamp of approval will guaranty more money in your pocket should you ever choose to sell your timepiece or obtain a collateral loan against it.

Widely known today as the “Pawn Shop to the Stars”, Beverly Loan Company was founded in 1938, towards the end of the great depression, by Louis Zimmelman, who saw a need for a discreet, upscale collateral loan company that could serve Hollywood’s stars and affluent residents who found themselves in a cash crunch and in need of an immediate cash infusion. Beverly Loan was the first pawn shop in Beverly Hills and over the last 75 years it has thrived, even through the toughest of economic downturns.

Jordan Tabach-Bank, the family owned business’ third generation owner/operator, pointed to Beverly Loan’s strict adherence to customer privacy and security as the reason behind the company’s longevity and prosperity. “A hallmark of our success has been our respect for our clients, the safeguarding of their privacy and our unique ability to offer the largest collateral loans in the country,” noted Tabach-Bank. “We’re extremely excited to open New York Loan Company and bring this service to our east coast clients who previously had no local resources such as this at their disposal.”

 New York Loan Company will be located in the exclusive International Gem Tower on 47th Street in New York City’s Diamond District. Tabach-Bank said, “Clients will enjoy the same discreet, secure and professional environment at New York Loan that its west coast counterpart has offered for 75 years.”

As the value of art increases more and more collectors are taking advantage of the equity they have in their collections.  Collectors have realized their Picasso’s, Warhol’s and Lichtenstein’s can be used as collateral.  High-end pawn shops are loaning money to the wealthy for their works of art. Collateral loans on art are certainly not new, however they are gaining in popularity. For many, art is a passion and selling part of their collection is not an option, but a collateral loan allows the owner to access equity and retain possession of their cherished piece.  For others taking out pawn loan allows them to hang on to their investment as it further appreciates.  It makes sense for collectors in need of cash to pawn their art at a high-end pawn shop, where loans can reach six figures.

It also makes sense that wealthy collectors are turning to alternative forms of credit during this recession and subsequent credit crunch.  Pawn loans don’t require credit checks and will not negatively affect credit in the event that the loan cannot be repaid.  For those who need liquid cash quickly, whether it’s to finance more art, a business deal, a real estate transaction or just to take care of an unexpected emergency, a pawn loan puts money in the hand on the same day.  Applications for bank loans, even for the wealthy, are difficult to get approved.  For those who can get approved, the process takes weeks or more, and when trying to finance a business transaction or purchase a new piece for a collection weeks can mean a lost opportunity.

High-end pawn shops cater to the wealthy and many specialize in fine art.  Modern and contemporary art is the most popular on the market and likely to bring the highest dollar amount.  Art is subjective, and much like the art market where prices and tastes can seem arbitrary, a pawn broker’s decision to loan or not to loan and at what amount is based on more than just estimated value of the piece.  Getting a pawn loan on art is, however, a fairly simple process.  Pawn shops are looking for provenance, including auction records, appraisals, certificates of authenticity, and original receipts.  They are looking for authenticity from the collector as well as their own expert opinion on the value of the piece.  Once authenticity and value have been determined an offer can be made.  The economy may still be struggling, but the art market is booming and it’s a good time for collectors to take advantage of the equity that’s hanging on their wall.

CNBC Reporter

Mark Friedman is an investor and bail bondsman to the stars. Inside a room with an armed guard in a building in Beverly Hills, Calif., he is getting ready to pick up his wife’s five-carat wedding ring which he pawned earlier for some quick cash.

“I’m in the real estate business, and sometimes you need to come up with $50,000 to $100,000 on the spot,” he said. “You can’t take the jewels to Bank of America downstairs when you got to get money that day, so you come to Beverly Loan.”

Beverly Loan Company is a high-end pawn shop three floors above the Bank of America branch on Santa Monica Boulevard. CEO Jordan Tabach-Bank’s grandfather started the company 75 years ago.

“The amount that we have loaned out on the street is up about 10 percent from last year,” Tabach-Bank said. “We’re seeing more and more white collar customers bringing in large diamonds.”

He pointed to an 11-carat pink diamond which he says would retail for $2 million. He’s selling it for $800,000. “When it’s more than $1 million off retail, that’s a good deal.”

The National Pawnbrokers Association estimates there are 10,000 pawn stores in the U.S., up from 6,389 reported in 2007 by the Census Bureau. Business boomed during the recession. However, Jefferies reported that pawn fees in the third quarter of 2012 grew only 8 percent in a year, down from the 21 percent growth in 2011.

The pawnbrokers association told CNBC that members have found “a new type of customer” at the high end of the market “as small businesses and affluent customers are leveraging their luxury items, art and estate quality jewelry to fill the need for cash.”

Jordan Tabach-Bank said he is seeing more wealthy clients come in to get loans not just for personal cash flow, but for business purposes. Many of them need cash immediately, and some do not want to risk a credit check. He doesn’t care about credit ratings, only the value of the collateral.

Who are these people? One client owned several pop up stores for the holidays but ran out of inventory. This customer either didn’t have the time or the credit to go to a bank. “So they came to me, brought their watch collection, got cash on the spot, bought the (inventory) and have since come back.”

Tabach-Bank is so confident about the outlook for his business that the company is expanding for the first time. Later this year it will open a branch in New York City’s diamond district.

Beverly Loan’s offices are filled with unusual goods—some pawned and never redeemed, some purchased outright. There’s Coolio’s 1996 AMA Award for Favorite Rap/Hip Hop artist (“iconic!” said Tabach-Bank). In the corner of the conference room is the original Energizer Bunny which the CEO bought while being part of a reality show on The Discovery Channel called “Final Offer.”

Three large cap companies are in the pawn sector, though the national association says they only cover 13 percent of the business: Cash America, EZCROP and First Cash Financial.

Jefferies has a “buy” on First Cash, mainly for strong growth in Mexico, small exposure to the payday lending side of the business, and the fact that most of its collateral is not gold. Gold is increasingly being used by the wealthy for pawn loans, said Tabach-Bank. He said he’s even seen clients bring in gold bars.

Wealthy customers who never expected to come to a pawn shop have been stopping by. Tabach-Bank referred to one hesitant client who needed to cover year-end bonuses for his employees. “He needed a quick infusion of cash, he had some outstanding receivables. He came in here, received a collateral loan, and he was able to pay out his bonuses, but he was a bit tentative.”

Pawn shop loans in California can only last four months, but they are often rolled over. Beverly Loan Company charges about four percent a month, so the fees can add up. However, the company claims 92 percent of collateral is redeemed by people coming back and paying off their loans. “Banks would love that kind of rate,” the CEO said.

How much does he lend based on the value of the collateral? Half? A third? “Here’s the most important question I would ask: ‘How much are you looking to borrow?’” Tabach-Bank said, “and the reason why is I don’t want any of my customers borrowing more than they need to.”

“They want people to come back and redeem it so they have other business,” said customer Mark Friedman. “This is a tough business. Sometimes you’ve got to go to the street, literally stand on the corner and give up your jewelry to get money. Here you know if you put in $1 million, $2 million, $5 million in jewelry in here, you’re going to get it out when you make a payment.”

Friedman said he is a regular customer who comes in two or three times a year, and he volunteered to be interviewed. Getting information about other clients from Tabach-Bank is difficult. He has an Oscar on loan which he says we would all recognize. “What movie?” he was asked. “Can’t say,” he answers.

The CEO also hints that there have been many stars who’ve called ahead to come in and confidentially pawn or sell engagement or wedding rings from relationships gone wrong. “Can you name any names?” a reporter asked. Tabach-Bank replied evenly, “Of course” pausing, “not.”

Marketplace

 As the economy has suffered, one business model has thrived: the pawn shop. In fact, this may be the golden age of pawn.

 The number of pawn businesses has increased by half in the last five years to around 10,000 shops. And over that same time, the average pawn loan has almost doubled to $150.

 “There’s been a real renaissance in the pawn industry,” says Emmett Murphy, spokesperson for the National Pawnbrokers Association. “We’re seen a real change in the way the American public perceives the pawn industry. This is partly due to the success of television shows like ‘Pawn Stars’ or ‘Hardcore Pawn.’”

 And it’s not just people on the lower-end of the economic ladder that drive business. The industry is also seeing growth at the extreme high-end of the market.

 Jordan Tabach-Bank owns Beverly Loan Company. He doesn’t flinch at the idea of a million dollar pawn loan.

 “We have made seven-figure loans,” he says.

 His pawn shop defies stereotypes. It’s discretely located on the third floor of an office building in Beverly Hills. Art by the likes of Keith Haring and David Hockney adorns the walls. To provide confidentiality, employees discuss business with clients in private offices. His customers pawn everything from Picassos to fine-wine collections to diamonds.

 Last year, business was up 10 percent due, in part, to clients from the top one percent.

 “We really specialize in those white-collar customers. And never before have we seen so many in need of short-term lending,” says Tabach-Bank.

 In the wake of the Great Recession, banks are making fewer loans. The upscale pawn shop offers an alternative.

 At a bank, Tabach-Bank says, “You might fill out stacks of paperwork, provide financial statements. It will go to loan committee and you’ll be denied. Here, you can walk out with $250,000, $500,000 in a matter of minutes, only signing one document.”

 Many of his customers need the money for business.

 “We’ve found many business owners coming in here, especially during the holidays, who needed to meet bonus demands for their employees,” says Tabach-Bank. “We have business owners who are waiting for escrow to close; many real estate brokers. We’ve had customers who are simply looking to grow their business.”

 Bob Donnelly pawned his watch.

 “I just recently did a loan with them for a Patek watch,” says Donnelly. “It was a decent loan. You know, five figures. I use it in lieu of a kind of business line.”

 In Las Vegas, Michael Mack owns a shop called Max Pawn that also targets the big fish.

 “We advertise that we’ll do a loan of up to a million dollars,” says Mack. “But if it’s something bigger, we’ll look at it.”

 His shop doesn’t look like the typical purveyor of pawn either.

 “We often joke and say that we’re a pawn shop dressed up as a purse store,” says Mack.

 He specializes in status-symbol bags from Louis Vuitton, Gucci, Chanel, Hermes — some worth $80,000.

 Over the years, he’s given pawn loans for cars, boats and even jets.

 “We’re seeing people with great wealth — with assets that they accumulated during the good times — that need cash,” says Mack.

 He charges up to 13 percent interest per month. But it’s negotiable.

 “The more you borrow, the less you pay,” says Mack.

 Pawn shops in Florida and some other southern states are allowed to charge 25 percent interest per month.

 Jay Martin sees those rates as an opportunity for his online shop, PawnUp.com.

 “With us, you could pay as little as 2 percent. And, you know, as high as 10 percent,” says Martin.

 He says clients shop around for the best rates, especially for high-end deals.

 “I’m seeing what I believe are people that, if you turned the clock back ten years ago, they were doing really, really well,” says Martin. “So today, that two-carat or three-carat ring that they purchased then possibly for $20- or $30,000, that’s what they’re using today to try to get thousands of dollars for a short-term loan or to pay their taxes.”

 Online pawn shops are a relatively new phenomenon. Owners of walk-in businesses like Michael Mack don’t necessarily worry about the competition. But he recognizes the online trend.

 “It’s getting bigger and bigger, and at the end of the day, the traditional brick-and-mortar pawn shops are going to have to get into the Internet pawn as well,” says Mack.

 The owners of these companies wouldn’t reveal how much they make. But business is good enough that PawnUp.com plans to open a new office in Colorado this month. And Beverly Loan Company is expanding this spring with a new branch in New York City’s diamond district.

With holiday bills starting to come due, even some affluent Americans may be looking for a source of quick cash. But these days, the wealthy are increasingly likely to be wooed by lenders from a place outside the traditional financial realm—the local pawnshop.

In recent years, the pawn industry, once saddled with a skid-row reputation, has targeted a more mainstream and sometimes downright wealthy clientele by offering to deliver short-term cash with speed and discretion. See Pawn shops enter holiday-shopping fray

Colorado-based Pawngo, an online pawnbroker that launched in 2011, is appealing to the moneyed set by advertising loans of up to $1 million “without financial disclosures or bank hassles.” Some established pawnbrokers also are pursuing the high-end market: Beverly Loan Co., a 75-year-old business in Beverly Hills, Calif., that describes itself as an “upscale collateral lender,” is adding a Manhattan branch this year.

More surprising, industry analysts say, is that at least some wealthier borrowers are responding positively to the pitch—despite interest on loans that can reach 240% a year. Indeed, the growth in the higher-end segment is helping fuel the pawn business as a whole, according to Marketdata Enterprises, a Tampa, Fla., research and consulting firm. It estimates that pawnshop revenue topped $15.5 billion in 2012, a 7.2% increase from the previous year, and it projects similar growth in 2013. “People who wouldn’t ordinarily go to a pawnshop are considering services like this,” says Marketdata research director John LaRosa.

To be sure, some of this white-collar growth reflects the economy’s lingering struggles. But pawnshop owners say more upscale clientele are responding to a different kind of economic pressure: With credit tight, even the rich can’t always get a traditional loan on short notice. Finding bank financing can be particularly thorny for small-business owners with cash-flow issues.

“We can hand out $100,000 in a matter of 10 minutes,” says Jordan Tabach-Bank, chief executive of Beverly Loan. Mr. Tabach-Bank says his well-heeled loan applicants often only need a cash infusion as a “bridge” if they are buying a home while selling another, or to jump into an investment opportunity. Among the common collateral: artwork, diamonds and gold.

Click to Play  Pawn shops enter holiday-shopping frayAs retailers like Tiffany, Saks, Best Buy and Wal-Mart vie for last-minute holiday sales, customers are being drawn away by a growing crop of competitors: pawn shops. Andria Cheng has details on Lunch Break. Photo: Getty Images.

Even borrowers who can get a conventional loan may still prefer the pawn route because it is relatively streamlined and private, with no loan committees or reporting to credit agencies. Indeed, all that most pawnbrokers require from applicants is identification and, of course, an item to be used as collateral. (Once the loan is paid off, the borrower can reclaim the item.)

Still, there’s a literal price to be paid—namely, those eye-popping interest rates. For that reason, financial advisers continue to advise borrowers to exhaust every other option—a home-equity line of credit, a loan from a family member or a high-interest credit card—before pawning anything. “A credit card that’s 25% a year is cheaper than a loan that’s 25% a month,” says Michael McGervey, president of McGervey Wealth Management in North Canton, Ohio.

From Las Vegas and Los Angeles to Orlando, Fla., pawn shops appear to have shed their stigma and become a holiday-shopping destination. “We are seeing good traffic for the holiday season,” said Dennis Weese, chief operating officer of publicly traded Cash America International Inc. CSH -0.61% , which has 800 stores in 23 states. “We have a broad spectrum of customers that come in for the holidays.”

No longer are such outlets focused solely on lending to low-income consumers in downscale neighborhoods. Many pawn shops are expanding in more-affluent areas and increasingly are seeing white-collar and higher-income shoppers — who not only may borrow money, but also buy new or used jewelry, luxury watches, game consoles and electronics, often at deep discounts compared with regular-priced retail merchandise.

“The new customers are coming from all segments of the population. What’s central to all of them is getting a good deal,” Weese added. “The consumer is very value-oriented today regardless of socioeconomic status. They put us in the consideration set the past three or four years. The stigma associated with used merchandise has gone away.”

To better compete with mainstream retailers, Cash America has its own holiday-layaway program and stages its own annual customer-appreciation event on the first Friday of December, which Weese said “gets bigger every year.” Demand for that day serves as a good indicator of its sales for the month.

In addition, the company is running commercials in markets such as Las Vegas and New Orleans, touting things like electric guitars and a diamond ring that it said are up to 70% off retail. To make sure its products are priced competitively, it scours website prices along with local circulars.

“The composition of customers in the last three to four years has changed,” Weese commented. “It’s a very sophisticated shopper. That forces us to be very competitive. We research what everybody is doing in the marketplace.”

Pawn shops traditionally have been seen as a last-resort source of financing for those barely making ends meet (or worse) in the U.S. economy. Yet the recession stemming from the housing bust and the financial crisis of 2008 led many middle- and upper middle-class shoppers to visit pawn shops for the first time, mainly to seek financing. They then discover there are good deals to be had there, according to pawn-shop operators. Meanwhile, shows such as History Channel’s “Pawn Stars” have helped lower the negative impression that consumers may have about shopping at such stores.

The National Pawnbrokers Association estimated there were about 10,000 pawn shops in January, up from about 6,400 in 2007, when the most recent U.S. Census data were available. As evidence of their broadening acceptance, many of the new pawn shops are being opened in more-upscale neighborhoods across the country, the trade group’s spokesman Emmett Murphy said.

Cash America’s Weese, for instance, said the company also has gone “more upstream” and targets new store openings in “good locations” where it can. These factors have combined to lure bargain shoppers seeking holiday deals.

“Last year we saw a huge trend in customer traffic over Christmas,” Murphy added. “People are interested in finding that unique item.”

Some pawn shops may not afford consumers the same kind of generous return and refund policies of established retailers. Cash America, for its part, says it backs everything with a receipt for 30 days, adding that if for any reason a product needs to be returned, the company will give a full refund, replace it with an item of comparable value or offer store credit.

More broadly, an improving economy and job market may pose challenges for pawn operators, because fewer people may see the need to sell or hock their luxury items or other desirable merchandise, creating inventory risk.

Taking a shine to pawn

People in the pawn-shop business provided examples of actual shoppers that underscore their growing retail focus. Quentin Caruana, owner of a company that sells preowned designer goods, recently drove four hours from Laguna Beach, Calif., to a Las Vegas pawn shop to buy his wife a $10,000 piece of diamond jewelry for Christmas — a purchase he said would have cost him $30,000 at regular jewelry store. That wasn’t his first time; he’s bought designer handbags, jewelry and other accessories at pawn shops before with the knowledge of his wife.

“I don’t see any difference about buying there versus at a department store that’s maybe [having a] sale,” Caruana said. “Most of the diamonds and jewelry, they get shined up like brand-new. A lot of times they also get things new that come in the original packaging.”

Caruana knows this firsthand: He’s a 37-year old former mortgage broker and banker who described himself as a “wealthy guy” until he was hurt by the bursting of the housing bubble, during which he turned in his prized Rolex and other possessions for cash at pawn shops. “By going and visiting these locations, I realized that I’m not the only one selling items, new items,” he added. Read more about the outgrowth of Caruana’s business from his trips to pawn shops.

While Caruana still visits department stores and boutiques such as Tiffany TIF -1.03% , Hermès or Louis Vuitton, he said he doesn’t shop as often at those places anymore after beginning to buy at pawn shops.

“Pawn used to be a four-letter word, but now it’s more sexy,” said Michael Mack, a fourth-generation pawn-shop owner who opened the upscale Max Pawn shop about five minutes off the Las Vegas Strip three years ago. “We are seeing high-end customers who used to go to Cartier and Tiffany. In today’s economy, people want deals.”

To meet growing demand, the company began selling online about 18 months ago. It has advertised for the first time promoting the luxury side of the business this holiday season, with tag lines such as “You don’t have to stand in long lines to get the best deals.” On Black Friday, Max Pawn “was mobbed,” according to Mack.

In California, Jordan Tabach-Bank, the owner of the Beverly Loan Co. in Beverly Hills, said he expects this holiday season to be one of his best, since his sales so far are higher than ever.

“We see hedge-fund managers, politicians, doctors, celebrity and professional clientele,” Tabach-Bank commented. “These white-collar customers want a deal. They are buying for wives, siblings, children and grandparents. It’s not embarrassing to say ‘I got this secondhand.’ It’s a source of pride to say you got a great deal. We’ll gift-wrap and make it look as beautiful as it looks on Rodeo Drive.”

One of the shop’s customers, Tom, an attorney who declined to give his last name, said he started going to Beverly Loan as a shopper three years ago. This holiday season, he reports he’s spent $15,000 there on a Rolex watch for his father and on diamond-set earrings for his wife.

The watch alone would have cost him as much as $30,000 elsewhere, Tom remarked. “I’ve always looked for a deal, and they have a good deal. You don’t feel like you are in a pawn shop. It’s like any other jewelry place.”

Because of increased demand, Tabach-Bank said the family-run shop, which has been going for more than 70 years, is opening a second location in New York.
Franchise opportunity

Money Mizer Pawn & Jewelry, a chain of seven company-owned and franchised locations in Alabama, Florida and Georgia, also expects to have a good holiday season as it’s seen a 15% increase in holiday sales since Black Friday. Chief Executive Robbie Whitten said Money Mizer saw its best retail sales ever last year, with its retail business growing faster than its loan business.

Four years ago, the chain would see 40% of customers coming in to buy and the rest to borrow money; those numbers now have reversed. Whereas 10% of its customers used to be white-collar, that demographic has grown to be 35% of its business. Money Mizer began to franchise its pawn-shop concept three years ago, targeting a total of 50 locations over the next five years.

“We’ve seen a big uptick in diamond sales of $1,500 to $2,500,” Whitten noted. “All of our stores are on the good side of the town, well lit and very nice.”

Shoppers also are coming in to buy musical instruments and antique pieces, as well as electronics including iPads, laptops and digital cameras. “Shopping at pawn shops has become popular,” he added. “The men and women from the country club and golf course aren’t afraid to be seen in here buying stuff. There’s no embarrassment.

Source: MarketWatch