Protecting Your Cash

When CEO Greg Brown pulled into Raleigh Metal Recycling one morning to catch up on work, he didn’t expect to interrupt an attempted robbery. Two suspects, who wore his company’s uniforms and masks over their faces, pistol-whipped him before kicking him and pushing him into the manager’s office, where the safe was located. Brown didn’t know how to open the safe, so the suspects left with his wallet instead. Shaken but not seriously injured in the incident, Brown considers himself lucky. “I could have been killed,” he says.

Scrapyards can become targets for robbers looking for quick cash. Some law enforcement officials recommend that scrapyards stop offering cash for scrap to cut down on this risk. Yet recyclers continue to pay in cash despite security challenges, complex state and local laws, and banking requirements. Even Brown, the president and CEO of Raleigh Metal Recycling (Raleigh, N.C.), Goldsboro Metal Recycling (Goldsboro, N.C.), and Benlee (Romulus, Mich.), says he has never considered eliminating cash as a payment method. “Customers want cash,” he says. “When they don’t get it, they go to my competitor.”

Since the harrowing robbery in 2014, Brown says his scrapyards have improved their cash-handling practices to prevent future thefts, but he won’t give many specifics because he doesn’t want to give crooks any ideas. There is one detail he does like to share, though, as a message to would-be thieves: “I carry a big gun now.”

State and Local Laws

The Raleigh robbery isn’t the first time the scrap industry has experienced violence related to cash handling. The same year Brown was robbed at gunpoint, another scrapyard owner, James Rolman of Hirschberg Scrap Metal in Lockland, Ohio, was shot and killed after he withdrew several thousand dollars from a local bank for business purposes. The shooter and an accomplice lured Rolman to a remote area under the guise of selling scrap metal before carrying out the robbery and murder, news station WLWT reported.

Each time a tragedy like this takes place, it shakes business owners to their core, says ReMA Counsel Scott Horne. “Some people [in the industry] start wondering, ‘Should we just stop using cash? Would that help?’” he says. Yet scrapyards must also take into account the wishes of their customers and the laws in their state or city, he adds. “The overwhelming majority [of peddlers] want to be paid in cash, but whether or not you can do that is sometimes dependent on state law,” he says.

Lawmakers’ efforts to combat metals theft often take aim at cash payments for scrap. Currently, 32 states have laws that place some restrictions on scrapyard cash payments, and five of those states (Georgia, Maine, Michigan, Minnesota, and Mississippi) completely ban cash payments for any kind of scrap. The legislative intent of these laws, says ReMA Legislative Analyst Justin Short, is to take away incentives for crooks who steal high-value items such as copper air-conditioner coils, stainless steel beer kegs, manhole covers, or even metal funeral urns to get quick cash.

Know the cash payment restrictions for your state or municipality, Short says, because no
two state laws are alike. Some states ban cash payments for any metal transaction, for particular metals such as copper, or for commonly stolen items such as catalytic converters. “Some cities [and counties] have their own laws, too,” Short says.

Raleigh Metal Recycling must follow North Carolina’s cash restrictions, which set a maximum cash payment of $100 for nonferrous metal other than copper and ban cash payments for copper. For any transactions over those cash thresholds, Brown says, scrapyards must pay by check, money order, or a “cash card system,” such as an on-site ATM that takes a picture of the seller at the time of payment.

If you have locations in multiple states, pay special attention to how cash-handling laws differ from location to location, Short adds. This is true for Upstate Shredding-Ben Weitsman (Owego, N.Y.), for example, which has 17 locations throughout New York and Pennsylvania. While New York has no cash payment laws for scrap, owner Adam Weitsman says “things are more strict in Pennsylvania,” where recyclers must track cash transactions by obtaining a seller’s signature on a receipt and certifying that the seller is the authorized owner or seller of the scrap metal, among other rules.

Other states have added special rules for scrap sellers who want to get paid in cash. In Texas, a seller must have a “cash transaction card” issued by a Texas recycler. Sellers who apply for the card must fill out an application that includes details such as their full name, a thumbprint, a photo of the applicant’s face, and signatures from both the applicant and the recycler.

If you are not sure of the specific cash payment requirements, contact ReMA to get the specifics and to sign up to receive alerts about potential changes to existing cash payment laws, Short says. (For a brief overview of each state’s cash payment laws, visit ISRI’s metals theft database at isri.org/metalstheftdb.) ReMA chapters are another good resource, he adds, because they keep tabs on cash payment laws that can affect specific cities or states in the region. Visit isri.org/about-isri/chapters for more information.

Preventing Theft

Working with law enforcement is not only a good way to ensure compliance with state and local cash-payment laws, it’s also a good way for companies that pay in cash to minimize security risks, says Brady Mills, ISRI’s director of law enforcement outreach. “Get to know your local police. Invite them to your yard for a look around, or [invite them to] park near the yard when they do paperwork. It’s a visible deterrent,” he says.

Mills says many law-enforcement officials say scrapyards should move away from cash payments to deter criminals, but that’s a hard sell for recyclers, who say cash helps keep them competitive, especially in challenging market conditions. If a business still pays cash, it can stay safe by implementing good security protocols, he says. That means creating secure areas where employees can safely store and handle cash. Such an area should have windows with ballistic glass and a heavy, locked door that can be accessed with a keycard, key, or code available only to specific employees, Mills says. The door should have either a peephole or camera that allows the person inside to see what’s on the other side of the door “in case someone’s waiting on the other side to surprise you,” he says.

Lock up cash within a secure area and have protocols for who has access to this cash before, during, and after business hours. Limit access to a manager or owner and the cashier, Mills says. “There’s no reason people working in the yard need to have access to cash.” ATMs should be serviced by an armored car company.

Some scrapyards rely on security cameras as an added safety feature but have mixed feelings about their effectiveness. Brown says cameras may be a deterrent if a would-be thief sees how many cameras a scrapyard has, but that was not the case when he was robbed. Brown’s robbery was captured on a security camera—and broadcast later on YouTube—but the assailants have never been caught. “They all just covered their faces” on camera, he says, and they yelled at him to cover his own face so as not to look at them. Weitsman says his company has invested thousands of dollars in security cameras, but he says the technology is only good for proving theft and providing evidence to law enforcement. “It doesn’t seem to prevent it much,” he says.

Safes, cameras, and locking doors are just pieces of a larger security picture, Mills says. Look around at your yard to identify possible security risks, such as tall bushes or poor lighting around building entrances that can hide potential thieves. Check your gates to make sure they are secure. Early-arriving employees should “make sure that gates close behind them” before parking.  After business hours, gates should be closed to protect late-leaving employees. Also keep an eye out for details that look unusual, such as motion-sensor lights that shouldn’t be on prior to your arrival, unfamiliar cars in the parking lot, or a car that seems to slowly drive by at regular intervals. “It’s about being aware of your surroundings,” he says. “If something seems off, leave.” If you do get held up, comply with the robber’s demands, Mills says, “until there are no other options.” Then flee or fight.

Ron Novas, executive vice president of Miami Waste Paper (Miami), says his company makes sure would-be thieves can clearly see the company’s security measures. The payout area of the scale house has bulletproof glass, a steel door, and surveillance cameras and signage in clear sight. There is limited access to the scale house, and there is a specific protocol for entering and exiting, counting cash, and securing any cash in the safe. There’s also a security watchman who stays on the premises overnight, Novas says. He believes the facility’s protocols have significantly reduced theft risks, but as long as it handles cash, those risks always will remain. “You have to treat it like a bank environment,” he says.

Weitsman agrees that scrapyards, like banks, always will be a target for theft. Bulletproof glass and overnight security are good measures, but “none of this stuff is foolproof,” he says. He hopes visible security measures such as video cameras and signage will deter possible criminals, but he also finds another measure helpful: cultivating a reputation as a scrapyard that prosecutes thieves. It worked when he learned some of his own employees were stealing, he says. “We used to just fire them. Now, we prosecute them” and make sure police escort them off the property while other employees are there so they see the consequences of stealing, he says.

Armored Cars and ATMs

Some scrapyard managers recommend hiring an armored car service to deliver and pick up cash and fill on-site ATMs securely instead of leaving the task to employees. Novas acknowledges that an armored car service might seem like a big expense, especially when scrapyards are trying to cut expenses, but he urges others to seriously consider it. About 10 years ago, Miami Waste Paper ended its armored car contract to save money, but it swiftly reinstated the contract after an employee was robbed while delivering cash to the scrapyard. After the robbery, “Brink’s seemed inexpensive compared to losing a day’s cash withdrawal,” he says.

Some scrapyards see ATMs as a simple solution that offers convenience and security in one, Horne says. In a couple of states, ATMs are the only legal way for peddlers to receive cash for their scrap, and the machines keep records that help with accounting and track withdrawals throughout the day. Security cameras on the machines also can capture photos of users, which can help piece together evidence when a scrap purchase is later discovered to be stolen material. And, Horne adds, some scrapyards have decided to use them instead of a human cashier, who could be at risk for robberies.

Brown, who has an ATM at his Raleigh facility to comply with North Carolina state law, says the machines have their pros and cons. The major pros are their accuracy and their ability to take humans out of the equation and out of harm’s way. The con, however, is that they take away some of the oversight. He has had problems with employees writing fake tickets for amounts larger than what the scrap is worth, then splitting the profits with a peddler. “Now we have management sign off on tickets over $300,” he says.

Complying With Banking Law

Scrapyards must comply with state cash-handling laws, but they also must comply with the federal Bank Secrecy Act of 1970, which applies when a business or individual withdraws $10,000 or more in a day, either as one transaction or several transactions. The act is meant to make it easier for government to identify money laundering and fraud, according to the Internal Revenue Service. The individual or business withdrawing the money must fill out a currency transaction report each time he or she withdraws more than $10,000 in cash or makes several withdrawals that add up to more than that amount in a day. Fill out the CTR each time you make an applicable withdrawal, Horne says, and when you pay any individual more than $10,000 in cash. “And where [scrapyards] really need to pay attention is when they pay an individual [outside of a bank setting]. That needs to be reported, too,” he says.

Weitsman says it’s critical for him to have cash on hand at his 17 yards, so employees often make several trips to the bank a day and withdraw more than the $10,000 that triggers the reporting threshold. Complying with the law is easy—it’s simply a matter of signing the same CTR each time, he says. “Our bank has us on file, so we know we sign something every time we go,” he says. The company’s bank has a list of employees who are authorized to withdraw cash, and it fingerprints the employees when they make a withdrawal and sign the form. “We need to dot all the I’s and cross all the T’s, every single time,” he says.

This banking requirement is not as common for places such as Miami Waste Paper, which does not buy metals and usually buys only small amounts of paper from peddlers each day. “Paper just costs less than metals, so we hardly find ourselves in a situation where we need that much cash on hand,” Novas says. When Miami Waste Paper buys “a trailerload of paper,” the company pays by check, not cash, he adds.

Failure to fill out the CTR form can lead to hefty fines, Horne warns. As of Jan. 1, 2016, businesses face a $250 fine each time they fail to fill out the CTR, and businesses found to have intentionally disregarded the filing process could face up to $100,000 in fines, according to the IRS. And don’t even think about bypassing the law by being clever, Horne says. Businesses that try to evade CTR reporting, such as by routinely withdrawing $9,999 in one or more transactions in a day, can be accused by the IRS of “structuring,” which is a federal crime punishable by up to $250,000 or five years in jail.

Checking In

Scrapyards can benefit from periodically going over their current cash and emergency policies to make sure the appropriate staff are all on the same page and complying with state and local laws, Mills recommends. Check in with employees who typically handle cash, either as a cashier or a person appointed to deposit and retrieve cash from the bank, to make sure they are not only in compliance with the law but also following safe cash-handling procedures such as being aware of their surroundings and handling cash in secure areas, he says. Meet with these employees when state or local cash-handling laws change so the scrapyard can stay in compliance, Short adds.

An external set of eyes can help improve security and safety, Weitsman suggests. His company recently hired a former New York Police Department captain as a theft prevention auditor who identifies company practices that can leave them vulnerable to theft. He also has identified specific employees who have stolen from the company. “Unfortunately, most of our theft problems lately have been from people who work for us,” Weitsman says. (For more on internal theft and workplace fraud prevention, see “Means, Motive, and Opportunity” in the November/December 2014 issue of Scrap.)

Despite the hassles and risks of dealing with cash, Novas says it’s the cost of doing business. “Cash is required when you want to be competitive,” he says.

Megan Quinn is reporter/writer for Scrap.