Mangaluru, August 14: The Enforcement Directorate (ED) has arrested Shivanand Siddappa Neelannavar, the head of Shivam Associates, in connection with an alleged Ponzi scheme that reportedly operated across multiple states, defrauding investors of millions.
According to the ED, Neelannavar was apprehended on August 13 under Section 19 of the Prevention of Money Laundering Act (PMLA), 2002. He was subsequently presented in a special PMLA court in Mangaluru, which remanded him to ED custody for 12 days until August 24.
The investigation began based on an FIR filed at the Malamaruti police station in Belagavi. This case was registered under the Prohibition of Unregulated Deposit Schemes Act, 2019, and the Karnataka Protection of Interests of Investors Act, 2004.
The FIR alleges that individuals were lured into investing by promising unusually high and guaranteed returns. During the investigation, the ED discovered that Shivam Associates was allegedly operating an organized Ponzi network spanning several states. The company reportedly raised approximately ₹2110.97 crore by promising investors a monthly return of 3%.
The ED claims that the company utilized a digital network and a large referral system to attract investors, extending its reach to Karnataka, Maharashtra, Goa, and Chhattisgarh. Independent advisors who brought in new investors were offered a 0.5% commission.
Further investigation revealed that the company had been incurring significant losses in the stock market since 2019. To conceal these losses and maintain its market credibility, funds raised from new investors were allegedly used to pay interest to older investors.
The agency also alleged that cash was funneled through various private accounts, family members, and associated entities, such as Shivam Seva (OPC) Private Limited and Shivam Productions.
According to the ED, the allegedly embezzled funds were used to purchase luxury vehicles, build expensive bungalows, acquire properties in others’ names, and invest in film production. The agency has classified these funds as “proceeds of crime” under the PMLA.
The ED stated that the investigation is ongoing to uncover additional liabilities and gather comprehensive information about the flow of funds.
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