Lawmakers are drafting a bill that would regulate precious metal transactions in an effort to add safeguards to a business plagued by the sale of stolen coins and jewelry to obtain money for drugs.
“There is a real crime-related problem, and we are trying to bring structure to it,” said Sen. Philip Baruth, D-Chittenden. “We have a series of witnesses that say there are active connections between this group and the drug trade.”
A study committee on the Regulation of Precious Metal Dealers reviewed proposed legislation to set standards and certification requirements for Vermont’s buyers of precious metals during a meeting Friday in Montpelier.
Precious metals as defined in the bill include gold, silver, platinum, palladium, jewelry or other items that are not antiques or coins. Under the bill, many dealers would be required to obtain a license and keep tight records on the purchase and sale of these items.
Rep. Tom Koch, R-Barre Town, is chair of the committee. He said the bill will be a “moderate priority,” this coming legislative session.
“What’s driving it is the fact that there is a real problem out there, and there is something we can do about it even if we can’t solve the whole problem,” Koch said.
The bill aims to deter people from stealing precious metals to fund a drug habit, Koch said. However, some thieves might cross borders to sell in New Hampshire of New York in order to avoid the proposed regulatory hurdles in Vermont.
“So, yeah, we may be chasing people across the state’s lines, but I don’t think that is reason for us to do nothing,” he said. “That just says that other states need to get on board and attack those problem also because it’s widespread.”
Either way, regulation in Vermont is a good start to combat a national problem that Congress will not likely act on anytime soon, Koch said.
“I think there is a value in our doing it ourselves even if people do go across state lines, because it takes them a while to do that,” he said. “And many of these people who are involved in the theft are looking for a quick turnover because perhaps they are desperate for their next fix. And if they have to drive a few hours it might be discouraging for them.”
But the new rules and certification process drew criticism from some lawmakers because over-regulation might slow business to legal buyers.
“I think we are being particularly onerous,” said Sen. Alice Nitka, D-Windsor.
The draft bill requires dealers buying or selling more than $1,000 worth of precious metals to obtain a two-year certification priced at $200. The Office of Professional Regulation, a branch of the Secretary of State’s Office, will approve the application for certification that is designed to vet the dealers’ criminal history.
Nitka, vice chair of the committee, advocated for a dealer fee of $100.
The bill would also require dealers to document their purchases from sellers and sellers would be required to show a government-issued ID or pose for a photo.
In addition to a photograph of the items, the dealer would have to record all marks on the items, brand and model names, model and serial numbers, engravings, etchings, affiliations with any institution or organization, date, color, vintage or image represented. This information must be kept electronically for large dealers.
“That’s just good business,” Koch said, who defended the cataloging procedures.
“This is the point at which somebody is going to be able to catch what has been emailed as a stolen good,” he said. “I think we want to require that some time is being spent there and this is being itemized properly.”
However, similar to the certification fee, some committee members considered the detail of this cataloging requirement too burdensome. The documentation requirement must be completed by the day of the sale.
“What I want to avoid is that he can’t do anything until he cataloged all his items,” Baruth said, referencing the original requirement that cataloging must be completed before the transaction was final. “I think that would clog his business,” he said.
Some members doubted the dealers’ capacity to catalog the information at all.
“If you follow this, you have to have all kind of special equipment,” said Sen. Don Collins, D-Franklin, before reminding the committee of the larger picture. “What we are trying to do is reduce the number of illegal trades.”
In order to ease the burden on buyers, the committee changed the bill’s language to extend the items’ documentation time from the moment of sale to the day of the sale to prevent buyers from holding up sellers.
The bill would give law-violating dealers a one-time warning. Upon the second offense, such as by purchasing stolen goods or failure to document items, the dealer’s certification would be revoked.
“You get one chance to be a bad boy,” Koch said. “And on the second offense, that becomes disqualifying and the Secretary of State revokes the license.” (The term license was later change to certification.)
The committee is done with the bill, Koch said. It will remain in committee for now, including the House Judiciary Committee, where Koch serves as ranking member.
While the bill might be a moderate priority this session, Koch doesn’t see any significant hurdles.
“I think there is a lot of support for it — it’s bipartisan, it has no philosophical bounds,” he said.