The alleged deposit scam linked to Shivam Associates in Karnataka has come under intensified scrutiny, with investigators and financial experts estimating that the total fraud amount may rise to nearly ₹7,000 crore as unofficial cash transactions are examined. The case has affected thousands of investors, including retired defence personnel, senior citizens and small depositors who were allegedly drawn in by the promise of 3% monthly returns.
Probe Focuses on High-Return Deposit Scheme
At the centre of the case is Shivanand Neelannavar, owner of Shivam Associates, who is accused of collecting large deposits from investors by promising unusually high monthly returns. Authorities had earlier estimated the scam at around ₹4,600 crore after raids on the company’s offices, but investigators now believe the amount could rise significantly once cash-based transactions are fully traced.
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Preliminary findings suggest that more than 35,000 investors had deposited money with the firm. Many of them are believed to have invested retirement savings, fixed deposits, provident fund money and proceeds from sold immovable properties after being convinced that the scheme offered stable returns.
According to sources connected to the investigation, the company allegedly paid nearly 3% monthly returns for five to six years, which helped build credibility and attract more investors across Karnataka and neighbouring regions. Investigators suspect that this regular payout pattern strengthened public trust and encouraged reinvestment.
Cash Deals and Fund Diversion Under Scanner
Officials said investments were made through bank transfers, cheques and digital payments, while a substantial portion may also have been collected in cash through unofficial routes. Investigators believe these unaccounted cash deposits could significantly increase the final scale of the alleged fraud.
Sources claimed that investor funds were allegedly diverted into real estate ventures, film production projects and alternative investment avenues, including exchange-traded funds and cryptocurrencies. Agencies are now tracing financial trails to determine where the money was transferred and whether assets were acquired using investor deposits.
Financial experts said the operation appeared similar to a Ponzi-style structure, where payouts to earlier investors are sustained using funds collected from new depositors. Such schemes can continue as long as fresh money keeps entering the system, but collapse when inflows slow or withdrawals increase.
Investor Panic Grows as Accounts Frozen
Investigators are examining whether Shivam Associates had the mandatory regulatory approvals required to accept public deposits. Preliminary findings reportedly indicate that the firm may have operated without necessary permissions, raising concerns over compliance and oversight.
Shivanand Neelannavar remains in custody as investigators question him about financial transactions and alleged fund diversions. Authorities have frozen 17 bank accounts linked to Shivam Associates as part of the ongoing probe, while sources said the investigating agency may seek an extension of custody, alleging non-cooperation during interrogation.
The exposure of the case has caused panic among investors across several districts of Karnataka, with many uncertain about recovering their money. Experts have warned that the impact could be especially severe for retired individuals who invested their savings in the hope of steady monthly income. As more victims come forward and hidden cash transactions surface, investigators believe the Shivam Associates case could become one of the largest private investment frauds reported in southern India.
