Pawns in the game Although critics fault pawnshops for exploiting the vulnerable, they also serve as a source of quick cash for those without other alternatives BY TIM LEHNERT

PAMELA GIZZARELLI, the owner of Reliable Jewelry & Loan, one of Rhode Island’s oldest pawnshops, doesn’t resemble the pawnbroker in Dostoevsky’s Crime and Punishment. She is not withered, nor does she have "sharp malignant eyes and a sharp little nose." The matriarch of Reliable Jewelry, a family business founded in Olneyville in 1922 and now located at Westminster and Cranston streets, not far from Central High School, is 50ish, animated, and friendly. When I stopped in, Gizzarelli emerged from her office in a tracksuit outfit, seeming more likely to battle for a parking spot at Garden City than haggle over the loan for a hocked guitar. Her nephew, Anthony Flori, Reliable’s vice president, a genial fast talker, could be a car salesman or a pizza parlor owner, were it not for the 9mm Glock pistol displayed on his shoulder.

Empire Loan is located a few blocks away, on Broad Street. In addition to its Providence location, Empire has a flagship in Boston, and outlets in Worcester and New Bedford. Like Reliable Jewelry & Loan, Empire Loan is a family business. Although not part of the family, district manager Jeff Keithline, who fits the stereotype of the pawnshop operator even less than the folks at Reliable, has worked in the field for 20 years. A 50-year-old father of three, Keithline’s politics are liberal and he’s ever willing to spin a theory on American politics, culture, and society. You might call him the thinking man’s pawnbroker — he suggested that I Google "Bentham" and "usury" for an article on pawnshops by the 18th-century British philosopher Jeremy Bentham. Empire is only one of Keithline’s gigs. An accomplished bass player and songwriter who has played and recorded with Tom Waits and Steppenwolf, he got into the pawn business when a Boston shop hired him in the early ’80s because of his expertise in judging the value of guitars and other instruments. The display cases in Empire Loan’s windows don’t contain watches or rings. Rather, they feature enlarged dictionary definitions of the words "pawn," "loan," and "value."

Most of Rhode Island’s 15 pawnshops are in Providence, but there are also stores in Warwick, West Warwick, East Providence, Pawtucket, and Woonsocket. Dan Baldelli, the father of Tampa Devil Rays centerfielder Rocco Baldelli, owns a combination coffee shop-pawnshop-check-cashing outlet in Woonsocket. Pawnshops are typically located in high traffic, low-income areas. You won’t find one in Barrington or Wayland Square. Empire Loan is on a busy stretch of Broad Street, in between a liquor store and the Salvation Army, just west of downtown. The nearby businesses (Castillo Appliances, Mekong Seafood, New Asiana Market) indicate the diverse neighborhood. "We reflect the demographics of the neighborhood, and the city of Providence pretty accurately," Keithline says.

A few miles to the north of Empire Loan is Providence Pawn on North Main Street. The store lies a few blocks east of the Bonanza Bus terminal, not far from the Pawtucket-Providence line. This once-thriving commercial district now has its share of deserted storefronts. Providence Pawn’s clientele comes not from the comfortable homes of the East Side, but the nearby Camp Street neighborhood, the North End, and Wanskuck. As is the case with most pawnshops, the end of the month is a busy time for loans at Providence Pawn. When government checks dry up, and the rent and other bills come due, customers come in to pawn their jewelry, power tools, and stereo equipment.

Not everyone who pawns something is poor or hopeless, but pawnshops require a steady stream of people on the economic fringes to stay in business. Because of this, Amanda, a pawnshop patron during her days as a drug addict, takes a dim view of the business. "When I walk by a pawnbroker, I don’t see just commerce," she says. "I see someone profiting from broken lives." There are plenty of sad tales associated with pawnshops — stories of family heirlooms pawned for $50, never claimed, ultimately swallowed, and sold at a tidy profit by the pawnbroker. No one puts a gun to anyone’s head, of course, demanding that they pledge their jewelry for a cash loan, but the pawnshop represents commerce at its most raw.

THE CURRENT TREND in the pawnshop industry is creating a clean, well-lit mainstream retail environment — computerized stores with high quality merchandise. Yet pawnshops retain an underworld image of steel cages, darkened rooms, and gnarled men in fingerless gloves, counting greasy wads of bills.

Many people don’t understand how a pawnshop works, nor have they ever visited one. A pawn transaction is not complicated — the customer leaves an item of value as security against repayment of a cash loan. For a $30 loan, I pawned a new (still in the box) Toshiba DVD/VCR at Reliable Jewelry & Loan. Returning with my pawn ticket a month later, I paid $31.50 to get the thing back. This amount represented the loan principal, plus a five percent monthly interest charge. To extend the loan, I could have paid only the interest, leaving the pawned item to be redeemed at a future date.

Although Reliable’s loans range from $15 to $10,000, most are between $30 and $250, with $50 representing a fairly typical loan. To get my $30, however, I had to leave an item worth substantially more than that. My pawned DVD/VCR retails for at least $100. A pawnshop loan usually represents half or less of the pledged item’s resale value. Due to their rapid rate of depreciation, electronic goods tend to fetch particularly low amounts. I could have gotten more money by selling the DVD/VCR outright, rather than pawning it, but then, of course, the item would no longer be mine, and Reliable Jewelry & Loan would have immediately put it up for sale.

A pawnshop must hold an item until the period of the loan expires, and then provide notice if the merchandise remains unclaimed. Like many area pawnbrokers, Reliable Jewelry & Loan places a small advertisement listing expired pawn ticket numbers every month in the "legal notices" section of the Providence Journal. The law satisfied, the store will keep the merchandise for another 60 to 90 days and then try to sell it. At most pawnshops, if a customer returns during this "grace period" after the expiration of the loan, but before the item is put up for sale, they will likely have to pay additional interest, storage, or insurance charges. Most pawnshop pledges are redeemed. As a general industry-wide rule, about two-thirds of loans are repaid.

The usual pawnshop customer is on the economic margins of society. People on unemployment, SSI, and disability, as well as the marginally employed and working poor, are much more likely to use pawnshops than the middle class. John Caskey, an economics professor at Swarthmore College, and author of Fringe Banking: Check-Cashing Outlets, Pawnshops, and the Poor (Russell Sage Foundation, 1994), notes, "People requiring immediate cash loans typically have a history of living from paycheck to paycheck, juggling payments and being late on some." Some pawnshop customers are drawn from the roughly 10 million US households that don’t have bank accounts, although having a bank account does not mean that there is money in it, or that a person can obtain a loan. Pawnshop customers usually have bad credit or no credit, and may need immediate money for rent, food, cash-only car repairs, or a night out. There may also be a personal element. "Some people don’t like to go to family or friends for money, preferring to keep such loans as business transactions, despite the high financial cost of doing so," Caskey says. He notes that pawnshop customers, in addition to having poor credit and little income, tend to be disproportionately Latino or African-American and have low levels of education.

Security is a major issue in the pawn business. A buzzer typically admits customers through the front door. At Providence Pawn on North Main Street, the guys behind the counter are armed, and for cash transactions, you slide your ticket through the window of a separate bulletproof booth within the store. At Reliable, two of the most prominent things are the gun on Flori’s shoulder and the video monitor in Gizzarelli’s office. At Empire, the workers handling the cash sit, like bank tellers, behind a protective glass wall (and as in many banks, the workers are exclusively female). This level of security is not surprising given how pawnshops must keep a substantial amount of cash on the premises. Furthermore, their inventory is generally portable and easy to resell. Perhaps because of this level of security, the shops report few incidents. Flori says he has never had to draw his gun. "There are problems in the neighborhood," he says, "but nothing within these doors, and not with our customers."

The pawnbrokers with whom I spoke were adamant that they don’t deal in stolen merchandise. They concur that this isn’t just a matter of honesty — it doesn’t make good business sense to have hot items. Gizzarelli is particularly peeved at the perception that pawnbrokers sit in cages, trafficking in stolen goods. She says she wouldn’t be able to stay in business if this was so. If the merchandise was recovered, "The thief wouldn’t pay us, and the owner sure wouldn’t, so we’d be out." Pawnshops require that customers be at least 18 and have proper ID to pawn or sell something. In obtaining my loan at Reliable Jewelry, I had to produce my driver’s license (whose number was recorded) and make a thumbprint. Pawnshops keep a record of all transactions and report these to law enforcement. Alex Martinez, manager of Providence Pawn on North Main Street, says he has a good relationship with the police, occasionally getting calls asking him to be on the lookout for watches, TVs, or tools recently reported stolen.

UNLIKE BANKS, pawnshops make not only loans, but also sales. Their inventory comes from unredeemed pledges and merchandise bought outright from customers. Pawnbrokers track the daily price of silver and gold and are aware of the going rate for everything from diamond rings to saxophones. They are not interested in items of purely sentimental value, but if an item can be sold to a customer, most pawnshops will pay something for it.

Providence Pawn has a good selection of jewelry (the staple of any pawnbroker) as well as TVs, musical instruments, power tools, and bargain priced CDs, DVDs, and VHS tapes. The story is the same over at Reliable Jewelry & Loan, although Gizzarelli and Flori will take on such esoteric items as Hummel figurines. Reliable keeps a full bookcase of price guides to properly gauge the value of antique silverware, classic baseball cards, and a variety of other stuff. In addition to its Westminster Street store, Reliable rents a space at the Taunton Antique Center to sell collectibles and vintage items. The advent of eBay has proved a boon to the pawnshop owner. Alex Martinez, manager of Providence Pawn, lists much of his store’s inventory online, and he says this has become common in the business.

Empire Loan, which also serves as a Western Union agent, is a slightly different operation than Providence Pawn and Reliable Jewelry & Loan. While these stores are glad to add to their stock of merchandise (at the right price, of course), Empire’s inventory is composed chiefly of jewelry, and the store rarely buy miscellaneous items. Empire also goes to some lengths to get pawners to redeem their pledges, notifying customers by certified mail when the term of their loan has expired. " ‘We want your money, not your stuff,’ is the motto around here," says Empire Loan’s Jeff Keithline. Because Empire deals principally in jewelry, and actively encourage borrowers to return, more than 90 percent of the store’s pledges are redeemed.