Iowa Supreme Court
677 N.W.2d 761 (2004)
Edwin Pace (defendant) sold customer-owned, coin-operated payphones to investors. Pace offered investors a sale-leaseback option upon purchase, which enabled investors to lease the payphones to management companies immediately upon purchasing the payphones. Pace sent the purchased payphones directly to the management companies. The management companies placed the payphones in their locations, handled the day-to-day operations of the payphones, and paid investors a monthly fee. In the course of selling the payphones, Pace told the investors that they would own the payphones leased to the management companies, that their investments in the payphones were very safe, that they would receive high returns on their payphone investments, and that the management companies were fiscally strong. Pace did not tell the investors that their investments were risky, that the returns promised by the management companies most likely could not be realized, and that the payphone program amounted to a Ponzi scheme because lease payments could only be paid through the sale of future payphones. Pace was charged with violating Iowa’s Consumer Fraud Act (Act), Iowa Code § 714.16. The trial court determined that Pace’s marketing and sales practices amounted to consumer fraud in violation of the Act. Pace appealed.
Rule of Law
Holding and Reasoning (Ternus, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 221,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,100 briefs, keyed to 189 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.