ED files prosecution case in ₹2,459 crore ponzi scam; more than 35,000 investors defrauded

File photo of Shivanand Siddappa Neelannavar. | Photo credit: SPECIAL ARRANGEMENT

The Enforcement Directorate (ED) has booked five persons and entities, including alleged kingpin Shivananda Siddappa Neelannavar and his firm Shivam Associates, in connection with an alleged ₹2,459 crore Ponzi scheme that defrauded more than 35,000 investors.

The complaint was filed on October 9 before the III Additional District and Sessions Judge, Mangaluru, to convict the accused in the money laundering case.

Neelannavar was arrested on 13 August 2026 and is currently in judicial custody.

According to the ED investigation, Neelannavar and his associates allegedly collected ₹2,459.49 crore by promising investors guaranteed returns of 3% per month and a referral commission of 0.5% for bringing in new investors. Neelannavar allegedly referred to the network operatives as “leaders”.

The agency claimed that a substantial portion of the money collected was diverted to repay earlier investors and maintain confidence in the system, while the remaining funds were diverted for personal enrichment. A principal amount of ₹ 2,125.60 crore has reportedly remained unpaid to investors.

The funds were diverted into stock trading, real estate and film production.

The investigation reportedly revealed that substantial amounts of investor money were deployed in high-risk stock trading, resulting in net losses of ₹185.95 crore.

Around ₹25 crore was allegedly channeled through cooperative credit societies, including Shreemata Co-operative Credit Society Ltd. and Dhanashree Multipurpose Co-operative Society Ltd. The funds were allegedly used to create fixed deposits which were then pledged to secure loans in the partners’ names to purchase land.

The ED also alleged that the funds were transferred to the bank accounts of Neelannavar’s wife Sangeeta and minor son Siddhant, as well as associated business entities. Shivam Sevaa (OPC) Pvt. Ltd. reportedly received ₹19 crore, while Shivam Lifeline Pvt. Ltd. and Shivam Foods were also identified as associated businesses.

In another alleged diversion, ₹5 crore from pooled public deposits was used to finance the commercial production of the Kannada feature film Champion.

₹ 2.02 crore frozen

The ED conducted searches at eight premises linked to the accused and their associates in Belagavi, Chikkodi and Nipani in August 2026. The searches reportedly led to the seizure of documents, handwritten audit notes, mobile devices and software transaction records, which the agency said helped trace the movement of alleged proceeds of crime.

The investigation also uncovered alleged financial links between the accused, their family members and several entities used in the transactions. Bank accounts and fixed deposits containing ₹2.02 crore belonging to key associates were frozen.

The case stems from an FIR registered by the Malamaruthi police station in Belagavi under the Bharatiya Nyaya Sanhita Act, 2023, the Prohibition of Unregulated Deposit Schemes Act, 2019 and the Protection of Interests of Depositors in Financial Institutions Act, 2004 in Karnataka.

Published – 10 Oct 2026 20:04 IST