ED Arrests Shivanand Neelannavar In Multi-State, Multi-Crore Ponzi Scheme Case
Neelannavar was arrested on August 13 under Section 19 of the Prevention of Money Laundering Act (PMLA), 2002. He was produced before the Special Court (PMLA) in Mangaluru, which remanded him to ED custody for 12 days, till August 24.
Belagavi: The Directorate of Enforcement (ED), Mangaluru Sub Zonal Office, has arrested Shivanand Siddappa Neelannavar in connection with an alleged multi-state, multi-crore Ponzi-style investment scheme in which investors were allegedly lured with promises of high and assured returns.
Neelannavar was arrested on August 13 under Section 19 of the Prevention of Money Laundering Act (PMLA), 2002. He was produced before the Special Court (PMLA) in Mangaluru, which remanded him to ED custody for 12 days, till August 24.
According to the ED, Neelannavar was the “whole and sole” person managing the fund flow of M/s Shivam Associates, which is alleged to have operated the investment scheme.
The ED initiated its investigation based on an FIR registered by Malamaruthi Police Station in Belagavi City under the Banning of Unregulated Deposit Schemes Act, 2019, and the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004. The FIR alleges that public were induced to invest money by promising them abnormally high and assured returns.
ED during investigation has unearthed a highly organized, multi-state Ponzi scheme operated by M/s Shivam Associates under the primary control of its majority partner, Shivanand Siddappa Nilanavar.
“Investigation under PMLA, 2002, reveals that the partnership firm illicitly mobilized a staggering Rs. 2,110.97 Crore from public investors by falsely promising astronomical monthly returns of 3 percent. A digital mapping system and an extensive referral network across Karnataka, Maharashtra, Goa, and Chhattisgarh were systematically leveraged to lure victims through independent agents, who were compensated with referral percentages (0.5) to ensure a continuous influx of capital,” the press statement stated.
“It has been revealed that M/s. Shivam Associates operated an unsustainable Ponzi-style scheme, collecting Rs. 2,110.97 Crore from investors while only accounting for a fraction in repayments. Further as also been unearthed that the firm suffered severe, compounding losses in the stock market since 2019. In an attempt to mask these deficiencies and retain market goodwill, fresh principal deposits collected from subsequent investors were directly diverted to fulfil interest obligations due to earlier investors,” it added.
Liquid funds were rapidly layered and integrated through various personal accounts, family members, and allied entities, including Shivam Sevaa (OPC) Pvt. Ltd. and Shivam Productions.
The ED stated that the illicit capital was further utilized to acquire personal luxury vehicles, construct high-value bungalows, purchase properties in the name of sake partners, and route expenditure into movie productions.
