₹2,459 crore Ponzi case: ED claims investors' funds were routed through family accounts and firms; 35K Cheated — Details

The Enforcement Directorate (ED) filed with III. of the Additional District and Sessions Court, Mangaluru, a complaint against five individuals and entities in connection with the alleged ₹2,459 crore Ponzi scheme that allegedly defrauded more than 35,000 investors, according to a report by The Hindu.

Among those named in the money laundering case is alleged mastermind Shivanand Siddappa Neelannavar and his firm Shivam Associates. The complaint, filed on October 9, seeks conviction of the accused. Neelannavar was arrested on August 13 this year and is currently in judicial custody.

According to ED findings, Neelannavar and his associates allegedly raised ₹2,459.49 crore from investors by offering a guaranteed monthly return of 3%, along with an additional commission of 0.5% for referring new investors. Neelannavar is said to have described the network operatives as “leaders”.

The agency claimed that money collected from new investors was largely used to repay those who had invested earlier, helping to keep the system running and maintaining investor confidence. The remaining funds were allegedly diverted for personal gain.

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The working draft estimated that investors were left without repayment of the total principal amount ₹2,125.60 million crowns. The money was allegedly diverted to stock markets, real estate and film production.

The investigation revealed that a significant proportion of investors’ money was allegedly invested in high-risk stock market trading, resulting in net losses of ₹185.95 million crowns.

ED also delineated the surroundings ₹$25 million to cooperative credit institutions, including Shreemata Co-operative Credit Society Ltd. and Dhanashree Multipurpose Co-operative Society Ltd. The money was allegedly deposited in these institutions to create fixed deposits, which were then used as collateral to obtain loans in the partners’ names to purchase land.

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The agency further alleged that funds from the scheme were transferred to bank accounts belonging to Neelannavar’s wife Sangeeta and his minor son Siddhant, besides being channeled into related business ventures.

Among the entities identified was Shivam Sevaa (OPC) Pvt. Ltd. which he allegedly received ₹19 million. Shivam Lifeline Pvt. Ltd. and Shivam Foods were also identified as businesses associated with the accused, the report said.

The ED also claimed this ₹5 crore collected from public deposits was diverted for the commercial production of the feature film Kannada Champion.

ED searches transaction records, ₹2 crore frozen

In August 2026, the ED conducted searches at eight places associated with the accused and their associates in Belagavi, Chikkodi and Nipani. During the operation, officials seized several materials, including financial documents, handwritten audit records, mobile phones and software-generated transaction data. The agency said the findings helped it trace the alleged flow of revenue generated by the scheme.

Further investigations pointed to suspicious financial links between the accused, their relatives and multiple entities allegedly involved in routing the money. The ED subsequently froze bank balances and fixed deposits ₹2.02 billion held by key shareholders.

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The money laundering investigation stems from an FIR lodged at the Malamaruthi police station in Belagavi under provisions of the Bharatiya Nyaya Sanhita Act, 2023, the Prohibition of Unregulated Deposit Schemes Act, 2019 and the Karnataka Protection of Interests of Depositors in Financial Institutions Act, 2004.