Karnataka: ED Arrests Shivam Associates Promoter in Rs 2,110 Crore Ponzi Scheme Case
Mangaluru, Aug 14 (TNT): The Directorate of Enforcement (ED) has arrested Shivanand Siddappa Neelannavar, the alleged key person managing the funds of M/s Shivam Associates, in connection with a multi-state Ponzi-style scheme and money laundering case.
The ED’s Mangaluru Sub-Zonal Office arrested Neelannavar on Thursday under Section 19 of the Prevention of Money Laundering Act (PMLA), 2002.
He was produced before the Special Court (PMLA), Mangaluru, which remanded him to ED custody for 12 days till August 24, the Enforcement said in a release.
The investigation was initiated based on an FIR registered by the Malamaruthi Police Station, Belagavi City, under the Banning of Unregulated Deposit Schemes Act, 2019 and the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004.
According to the ED, its investigation uncovered a highly organised, multi-state Ponzi scheme allegedly operated by Shivam Associates under the primary control of Neelannavar.
The partnership firm allegedly mobilised Rs 2,110.97 crore from public investors by promising monthly returns of three per cent.
The firm allegedly operated an extensive referral network across Karnataka, Maharashtra, Goa and Chhattisgarh, offering referral incentives to investors to bring in new participants.
The ED said the scheme was unsustainable, with the firm suffering substantial losses in the stock market since 2019 and making only a fraction of the required repayments.
Funds collected from subsequent investors were allegedly diverted to meet interest obligations to earlier investors.
The agency further alleged that the funds were layered through various personal accounts, family members and allied entities, including Shivam Seva (OPC) Pvt Ltd and Shivam Productions.
The allegedly diverted funds were used to acquire luxury vehicles, construct high-value properties and purchase assets in the names of associates and relatives. Some funds were also allegedly routed into movie productions.
The ED has identified the misappropriated funds as proceeds of crime under the PMLA and said further investigation is underway to trace the remaining liabilities and the flow of funds.
TNT KS