Directorate of Enforcement (ED), Mangaluru Sub-Zonal Office, has filed a prosecution complaint before the III Additional District and Sessions Judge, Mangaluru, seeking conviction against five accused persons and entities — including kingpin accused Shivanand Siddappa Neelannavar and his firm M/s Shivam Associates — found involved in a money laundering case related to a ₹2,459-crore ponzi scheme.
The ED investigation was initiated based on an FIR registered by the Malamaruthi police in Belagavi under the Bharatiya Nyaya Sanhita, 2023, the Banning of Unregulated Deposit Schemes Act, 2019, and the Karnataka Protection of Interest of Depositors in Financial Establishments (KPID) Act, 2004.
Investigation revealed that the kingpin, Neelannavar, operated a ponzi scheme through M/s Shivam Associates and other entities. Neelannavar was arrested on August 13, 2026, and is currently in judicial custody, a release issued by the ED said on Saturday.
The prosecution complaint was filed on Friday.
During the investigation, extensive search operations were conducted in August across eight distinct premises linked to the accused and their associates in Belagavi, Chikkodi, and Nippani. The search resulted in the recovery and seizure of various incriminating documents, handwritten audit notes, and digital evidence — including mobile devices and software transaction records — that confirmed the illicit generation, movement, and parking of the proceeds of crime. Furthermore, the search operation unmasked a deep-rooted financial nexus among the primary syndicate members, their family members, and multiple front entities, while concurrently enabling the ED to freeze key associate bank accounts and fixed deposits containing ₹2.02 crore derived directly from siphoned investor funds.
Modus operandi
The release said that the PMLA investigation unmasked an organised investment fraud orchestrated by Neelannavar, and his associates, who illegally collected ₹2,459.49 crore from more than 35,000 gullible public investors. They lured victims through false representations that promised abnormally high, assured returns of 3% per month alongside a 0.5% referral commission for introducing new investors, with Neelannavar prominently introducing these network referral agents as “leaders”. The vast majority of the money was rotated to pay off older investors to sustain public confidence and was systematically siphoned off for personal enrichment, leaving a staggering principal amount of ₹2,125.60 crore outstanding and completely unpaid to the public as of date.
Diversion, layering of proceeds of crime
ED investigation revealed that the proceeds of crime were layered and diverted through multiple illicit channels, with substantial investor funds gambled in high-risk stock trading, resulting in net losses of ₹185.95 crore. Furthermore, approximately ₹25 crore was routed through a complex web involving cooperative credit societies — specifically Shreemata Co-operative Credit Society Ltd. and Dhanashree Multipurpose Co-operative Society Ltd — to create fixed deposits that secured loans in the names of associates for purchasing land parcels. In addition to real estate investments, funds were channelled into close family bank accounts, including those of his wife, Sangeetha, and minor son, Siddhant, as well as connected business ventures such as M/s Shivam Seva (One Person Company) Pvt. Ltd (₹ 19 crore), Shivam Lifeline Pvt Ltd, and Shivam Foods.
Finally, ₹5 crore was diverted from the pooled public deposits to finance the commercial production of a Kannada feature film titled ‘Champion’, the release said, adding that further investigation is under progress.
