ED Seizes ₹427 Crore in Karnataka Ponzi Scheme Linked to Over 35,000 Investors

Bengaluru, October 31 (Daily Kiran) : The Enforcement Directorate (ED) has taken significant action in a Ponzi scheme case in Karnataka, seizing assets valued at ₹427.16 crore linked to Shivanan Siddappa Neelannavar and his associates. This move is part of an investigation into a fraudulent investment scheme that reportedly defrauded over 35,000 investors of ₹2,459.49 crore, primarily in the Belagavi region.

The seizure falls under the Prevention of Money Laundering Act (PMLA), 2002. The assets confiscated include bank balances, fixed deposits, shares, bungalows, agricultural land, residential properties, and other real estate investments.

According to a press release issued by the ED on Saturday, the accused operated an investment fraud scheme through Shivam Associates and other affiliated entities. They promised investors an unusually high return of 3 percent per month, along with an additional 0.5 percent referral commission for bringing in new investors.

The scheme relied on a network of so-called “referral agents,” referred to as “leaders,” who were incentivized to recruit more investors by guaranteeing attractive returns. The ED estimates that approximately ₹2,459.49 crore was raised from these investors.

Investigations revealed that the funds collected from investors were diverted and layered through various channels to conceal their source and usage. A significant portion of this money was reportedly invested in high-risk stock market trading, resulting in a net loss of ₹185.95 crore. The probe also uncovered that about ₹25 crore was funneled through Shree Mata Cooperative Credit Society Limited and Dhanashree Multipurpose Cooperative Society Limited.

The ED alleges that the misappropriated funds were used to purchase agricultural land, residential properties, plots, and other real estate. Additionally, it is claimed that money was transferred into bank accounts belonging to the accused’s family members, including his wife and minor son.

The investigation has traced funds to related business entities such as Shivam Seva (OPC) Private Limited, Shivam Lifeline Private Limited, and Shivam Foods. Approximately ₹19 crore was directed to Shivam Seva (OPC) Private Limited.

As part of the ongoing investigation, the ED has conducted search operations, seizing documents, handwritten records, mobile devices, and other digital evidence. The agency had previously frozen bank accounts and fixed deposits amounting to around ₹2.02 crore that were generated from the funds acquired from investors.

The latest temporary attachment includes assets totaling ₹427.16 crore, which encompasses fixed deposits held in various banks and cooperatives, balances in 47 personal and corporate bank accounts, agricultural land, family bungalows, and booked apartments in development projects. The attached assets represent approximately 17.4 percent of the total ₹2,459.49 crore involved, highlighting the scale of financial transactions that investigators are working to trace.

The ED’s investigation is ongoing, focusing on the misuse of funds through family members, associates, cooperatives, and related business entities.