BENGALURU — The Enforcement Directorate has filed a prosecution complaint before the III Additional District and Sessions Court in Mangaluru against five individuals and entities, including alleged mastermind Shivanand Siddappa Neelannavar and his firm Shivam Associates, in an alleged 2,459 crore rupee Ponzi scheme that defrauded more than 35,000 investors across Karnataka. Submitted on October 9 in connection with an ongoing money-laundering investigation, the court filing formally seeks the conviction of the named accused. Neelannavar was arrested by federal investigators on August 13, 2026, and remains in judicial custody while the probe proceeds. The money-laundering case stems from an initial First Information Report registered by the Malamaruthi Police Station in Belagavi under provisions of the Bharatiya Nyaya Sanhita, 2023, the Banning of Unregulated Deposit Schemes Act, 2019, and the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004.
Lure of Monthly Payouts and Multi-Tiered Commissions
According to the central probe agency, the accused accumulated 2,459.49 crore rupees by promising prospective investors guaranteed monthly returns of 3 percent alongside an additional 0.5 percent commission for enlisting new participants. Operating through a structured promotional network, Neelannavar allegedly referred to marketing agents as leaders to broaden public outreach. Investigators noted that the enterprise functioned as a classic circulation model, where pooled funds from incoming depositors were channeled to service recurring commitments due to earlier participants. This arrangement kept default concerns quiet and sustained new inflows, while remaining proceeds were siphoned off for private gains. Out of the total collections, roughly 2,125.60 crore rupees in principal deposits remains unpaid, exposing thousands of contributors to severe capital losses.
Diversion into Equities, Real Estate, and Regional Cinema
Traces of the capital trail revealed that substantial volumes of public money were funneled into high-risk stock trading, incurring net trading losses of 185.95 crore rupees. The agency established that about 25 crore rupees moved through cooperative institutions, including Shreemata Co-operative Credit Society Ltd. and Dhanashree Multipurpose Co-operative Society Ltd. These sums were placed into fixed deposits and pledged as collateral to obtain loans in the names of associates, with the borrowed capital applied toward acquiring parcels of land. The probe further identified direct transfers into the personal bank accounts of Neelannavar’s wife, Sangeeta, and his minor son, Siddhant. The agency also detected that 5 crore rupees from the public pool was allocated to finance the commercial production of Champion, a Kannada feature film.
Searches Across Karnataka and Freezing of Bank Accounts
The diversion trail brought several corporate setups under regulatory scrutiny, including Shivam Sevaa (OPC) Pvt. Ltd., which allegedly absorbed 19 crore rupees, along with related businesses such as Shivam Lifeline Pvt. Ltd. and Shivam Foods. In August 2026, enforcement teams executed coordinated search operations across eight premises tied to the network in Belagavi, Chikkodi, and Nipani. The raids yielded evidentiary documentation, software transaction archives, handwritten audit materials, and personal mobile communication devices that outlined the financial dealings between the main accused, family associates, and controlled commercial fronts. Backed by these findings, the agency attached and froze 2.02 crore rupees held across accounts and deposit receipts belonging to key associates to prevent further dissipation of suspected crime proceeds. With the court accepting the prosecution complaint, judicial proceedings will now determine liability as legal scrutiny shifts to trial.
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