White collar crimes are crimes that involve deceit and are committed for financial gains. Just one example of a white collar crime is a pyramid scheme or Ponzi scheme. Generally, pyramid or Ponzi schemes operate by selling goods or services in exchange for an investment that is contingent upon recruiting others, who must also do the same. It's important to note that although a multilevel marketing business looks similar to a pyramid scheme, a multilevel marketing business is a legal business model.
Iowa doesn't have a specific statute prohibiting pyramid and Ponzi schemes. Instead, Iowa has general statutes that protect consumers from fraudulent acts and practices. The Iowa Attorney General has a Consumer Protection Division, which protects consumers in Iowa from fraud, and informs the public about consumer frauds and how to avoid becoming a victim of consumer fraud.
Iowa Pyramid and Ponzi Scheme Statute
The following table provides a quick summary for Iowa's laws related to pyramid and Ponzi schemes.
||Iowa Code Annotated § 714H.3, Prohibited Practices and Acts; § 714.16, Consumer Frauds.
|What is Prohibited?
||It is prohibited for a person to engage in an act or practice that the person knows (or reasonably should know) is an unfair practice, a false pretense, a false promise, a fraud, or a deception.
||The criminal penalty depends on the amount of money involved in the fraudulent practice. A fraudulent practice can be in the first degree, second degree, third degree, fourth degree, or fifth degree.
||In addition to criminal penalties, a person who is the victim of a prohibited act or practice can bring a civil action to recover actual damages if he or she suffers a measurable loss of property or money. There can also be additional civil penalties if the consumer fraud is committed against the elderly.
Iowa Pyramid and Ponzi Scheme Laws: Related Resources
You can visit FindLaw's sections on Fraud and Financial Crimes and Consumer Protection for more information and articles on this topic. If you or someone close to you is facing a pyramid scheme charge or any other white collar crime charges, it's in your best interest to contact a white collar criminal defense attorney in your area. If you would like legal assistance with a consumer fraud matter, you can contact a local consumer protection attorney.