David T. Rosen, a figure with a history of operating pyramid and gifting schemes, has launched a new venture called Coop5050. The scheme, which began in late 2020, operates without disclosing its ownership, a common tactic in such operations.

Coop5050’s website domain, registered in 2018, was last updated in November 2020. Its online presence offers no details about who is behind it. Investigations point to David Rosen, who was previously involved with PIE 24/7, a pyramid scheme active in 2015. He later introduced Cooperative Crowdfunding and 50/50 Crowdfunding in 2018, followed by CoopCrowd in late 2019. Coop5050 appears to be a direct successor to these earlier ventures. Rosen is believed to operate these schemes from Ontario, Canada. Current traffic analysis for Coop5050 indicates recruitment efforts are primarily focused in the United States, accounting for 71% of visitors, with the Dominican Republic representing another 22%.

The Coop5050 platform lacks any tangible products or services for sale. Participants can only market affiliate memberships to others. The core of the scheme involves affiliates gifting money to one another through an eight-tier structure. These gifting payments are managed via a 2x2 matrix system. In this setup, an affiliate is positioned at the top, with two spots directly below, forming the first level. The second level consists of four spots, derived from splitting the initial two positions.

New and existing affiliates fill these matrix positions by purchasing them. The funds generated from these purchases are distributed as gifting payments. For example, at the $25 tier, an affiliate gifts $25 and receives 50% of the total gifts across six positions, totaling $75. This structure scales upwards through tiers of $50, $150, $250, $500, $1000, $2000, and $4000, with potential returns of $150, $450, $750, $1500, $3000, $6000, and $12,000 respectively.

The system appears to facilitate automatic cycling. Upon completing a matrix, a portion of the initial gifting payment is reinvested to create a new position at the same tier. For instance, after receiving $75 at tier 1, $25 is automatically used to fund a new tier 1 position. Joining Coop5050 requires a minimum gifting payment of $25. Full engagement with all eight tiers would cost participants $7975. Promotional materials suggest that these gifting payments may be structured as recurring monthly obligations.

Coop5050 is essentially a revival of David Rosen's earlier CoopCrowd scheme, which collapsed. It blends characteristics of gifting schemes and Ponzi operations. New funds are used to pay those who have cycled through the matrices. Participants gift money to existing affiliates, and then receive funds from affiliates they recruit. The scheme also includes a Ponzi element by promising a 300% return on investment, such as gifting $25 to receive $75.

Given that 71% of Coop5050’s website traffic originates from the US, the scheme falls under the regulatory purview of the Federal Trade Commission (FTC) and the Securities and Exchange Commission (SEC). Gifting schemes are prohibited under the FTC Act, and Ponzi schemes, considered securities fraud, violate the Securities and Exchange Act. Like all such schemes, Coop5050’s viability depends entirely on continuous recruitment. When new participant sign-ups inevitably slow, the flow of new funds will cease, leading to stalled matrices.

The mathematical impossibility of perpetual recruitment means that enough matrices will eventually stall, triggering a collapse. Evidence of this pattern is found in David Rosen's prior ventures. PIE 24/7, Cooperative Crowdfunding, 50/50 Crowdfunding, and CoopCrowd all failed, with most participants losing their money. Rosen, through pre-loaded administrative positions, was the primary beneficiary of these failed schemes. Coop5050, employing the same matrix-based gifting model, is expected to meet a similar fate.

The FTC offers resources for consumers to identify and report scams at ReportFraud.ftc.gov.