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."
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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.
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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."
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 refered 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."
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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."
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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."
—By CNBC's Jane Wells; Follow her on Twitter: @janewells