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Property Bureau Inc. contracts with police to sell confiscated and unclaimed items

Tom Lane hopes to take a bite out of crime by making it a focal point of his start-up Internet business.

The former New York Police Department officer depends on shady characters to keep his San Clemente-based Property Bureau Inc.,an online auction site for police departments’ seized and unclaimed goods,stocked up.

“Unless crime goes to zero, there’s always going to be property that needs to be auctioned off,” said Lane, the company’s chief executive who founded the business with brother Kevin Lane, a shareholder and director.

The 25-person company partners with police departments statewide to sell the huge backlog of items seized from criminals and that otherwise might be collecting dust in evidence rooms.

The arrangement is simple: the Property Bureau, which does not charge for its services, routinely picks up inventory from police warehouses and then transports it to a 10,000-square-foot processing center in Los Angeles County, where it’s cleaned, repaired, digitally photographed, bar coded, reviewed and then uploaded to the Web site, www.property-room.com, for auction.

The dot-com retains up to 50% of revenue generated from sold items, and police departments get up to 75%, which is deposited into a city’s general fund, according to Tom Lane. A chunk of cash also is being set aside for a fund benefiting the children of officers killed on duty.

“It brings us to the 21st century,” said Lt. Rich Merideth of the Sacramento Sheriff’s Department, which has contracted with the Property Bureau. “We’re seeing a wave of the future,” he said.

Previously, the Sacramento department worked with a regional auctioneer to sell some of the hundreds of thousands of items held in its 25,000-square-foot warehouse. But Merideth said the results were limited, with auctions running for a short time and reaching a small audience.

“For the year, we projected we’d make about $30,000 off our auctions using a regional company,” Merideth said. “In two months time, we’ve already exceed that amount by $10,000 (contracting with Property Bureau).”

The site, which has 12,000 registered users and offers self-protection tips, has been running for about eight weeks, and Lane estimates it will be profitable by summer.

In the meantime, Property Bureau is eyeing more cash, Lane said, and marking its progress, which includes closing 3,000 auctions since its start-up on Feb. 6 and getting higher-than-anticipated prices for items auctioned. The privately held company would not disclose revenue generated to date.

“We’re raising $1 million with private investors right now,” Lane said. “We need to open up additional facilities to satisfy the police departments that are coming on board.”

So far, about 13 police departments in California have contracted with the Property Bureau, including two of its biggest clients, the Sacramento and San Bernardino County Sheriff’s departments.

More are reportedly waiting in the wings,one reason Lane said he plans to open another fulfillment center in Northern California. Eventually Property Bureau hopes to branch out to other parts of the country, including the northeast, Texas and Arizona.

To drum up new business, Lane has been hitting the road with former Los Angeles Police Chief Darryl Gates, who serves on the company’s board of advisors. There are about 18,000 police departments nationwide with about $10 billion worth of goods going through their property rooms each year, according to Lane.

“The key to the business is growing it at a pace that we can keep it profitable,” Lane said. “We didn’t come from the dot-com world. We’re building the business for the long haul.”

Another key to the model is keeping things convenient for police departments, which reportedly save time and money not having to store as much inventory and use employees to organize,and, in the old days, run,auctions.

“I’ve invested additional man hours clearing out the stuff because we have a venue that will provide us with more bang for our buck,” said Sacramento’s Merideth, estimating that the department gets 200% to 300% more cash for goods now that Property Bureau sells them.

The dot-com, which has about 700 or more items on its site at a given time, makes any necessary repairs. Offerings include jewelry, bicycles, autographed sports gear, electronic equipment and even a kitchen sink.

“We got one and resold it,” Lane said, chuckling.

And, for all those who have been taken for a ride themselves, the Property Bureau also offers a “Stealitback” section, where users can try to match barcodes of stolen items with those in the site’s database. If there’s a match, Lane said the goods will be returned to the lawful owners via police departments,for free.

The concept has gotten the site some big bites, including exposure on local television. As a result, Lane said the company spends little on marketing (Costa Mesa-based neoBrands handles its public relations) and hopes the business will gain momentum and “feed on itself.” n

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