ED attaches assets worth Rs 427 crore in Karnataka Ponzi scam
Bengaluru: The Enforcement Directorate (ED), Mangaluru in Karnataka, has provisionally attached movable and immovable properties worth Rs 427.16 crore belonging to Shivanand Siddappa Neelannavar and his associates in connection with an alleged large-scale Ponzi investment scam involving the collection of Rs 2,459.49 crore from more than 35,000 investors, primarily in Karnataka’s Belagavi region.
The action was taken under the Prevention of Money Laundering Act (PMLA), 2002. The attached assets include bank balances, fixed deposits, shares, bungalows, agricultural land, residential properties and other real estate investments.
According to an ED press release issued on Saturday, the accused allegedly operated an investment fraud scheme through Shivam Associates and other associated entities, promising investors exceptionally high returns of 3 per cent per month and an additional 0.5 per cent referral commission for bringing in new investors.
The scheme reportedly relied on a network of referral agents, referred to as “leaders”, who were encouraged to mobilise more investors by promising assured and attractive returns. The ED estimates that approximately Rs 2,459.49 crore was collected from over 35,000 investors through the alleged scheme.
The investigation has revealed that the funds collected from investors were allegedly diverted and layered through several channels to conceal their origin and utilisation.
A substantial portion of the money was reportedly invested in high-risk stock market trading, resulting in net losses of Rs 185.95 crore. The investigation also found that approximately Rs 25 crore was routed through Shreemata Co-operative Credit Society Ltd. and Dhanashree Multipurpose Co-operative Society Ltd.
The ED further alleges that investor funds were used to purchase agricultural land, residential properties, plots and other real estate assets. Money was also allegedly transferred to bank accounts belonging to family members, including the accused’s wife and minor son.
The investigation has also traced funds to associated business entities, including Shivam Sevaa (OPC) Pvt. Ltd., Shivam Lifeline Pvt. Ltd. and Shivam Foods. Around Rs 19 crore was allegedly channelled into Shivam Sevaa (OPC) Pvt. Ltd.
As part of the investigation, the ED conducted searches and seized documents, handwritten records, mobile devices and other digital evidence. The agency had also earlier frozen bank accounts and fixed deposits containing approximately Rs 2.02 crore, allegedly generated from investor funds.
The latest provisional attachment covers assets worth Rs 427,16,37,165. These include fixed deposits held across various banks and co-operative societies, balances in 47 individual and corporate bank accounts, 42 properties comprising agricultural land, family bungalows and bookings for apartments in developer projects, besides stock market investments held through CDSL demat accounts.
The attached assets are worth approximately 17.4 per cent of the total alleged collections of Rs 2,459.49 crore, indicating the scale of the financial trail that investigators are attempting to trace.
The ED’s investigation is continuing, with the agency examining the alleged diversion of funds through family members, associates, co-operative societies and connected business entities.
The provisional attachment is aimed at preventing the identified properties from being transferred or disposed of during the legal proceedings. The attachment will be subject to adjudication under the PMLA, and further investigation may lead to the identification of additional assets and beneficiaries.