Mangaluru: The Directorate of Enforcement, Mangaluru Sub-Zonal Office, has arrested Shivanand Siddappa Neelannavar in connection with a multi-state and multi-crore Ponzi-style scheme operated by Shivam Associate, an ED statement said on Friday.
Neelannavar was arrested on August 13 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, until August 24.
According to the ED, Neelannavar was the “whole and sole” person managing the fund flow of Shivam Associates and was the majority partner exercising primary control over the firm.
The ED’s investigation was initiated based on an FIR registered by the Malamaruthi Police Station in Belagavi City under the Banning of Unregulated Deposit Schemes Act, 2019, and the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004.
The FIR alleged that members of the public were induced to invest their money by promising them abnormally high and assured returns.
During its investigation under the PMLA, the ED said it uncovered an organised, multi-state Ponzi-style operation allegedly run by Shivam Associates. According to the agency, the firm mobilised Rs 2,110.97 crore from public investors by allegedly promising monthly returns of 3 per cent.
The scheme, according to the ED, used a digital mapping system and an extensive referral network spread across Karnataka, Maharashtra, Goa and Chhattisgarh to attract investors. Independent advisers were allegedly paid referral commissions of 0.5 per cent to bring in new investors.
The investigation further revealed that the firm had suffered severe and compounding losses in the stock market since 2019. The ED alleged that, in an attempt to conceal the losses and maintain market goodwill, funds collected as fresh principal deposits from subsequent investors were diverted towards meeting interest obligations to earlier investors.
The agency also alleged that liquid funds were layered and integrated through various personal accounts, family members and allied entities, including Shivam Sevaa (OPC) Pvt. Ltd. and Shivam Productions.
According to the ED, the allegedly diverted funds were used to purchase luxury vehicles, construct high-value bungalows, acquire properties in the names of nominal partners and fund movie productions.
The agency has identified the allegedly misappropriated funds as “proceeds of crime” under the PMLA.
The ED said further investigation is underway to trace the remaining liabilities and establish the complete flow of funds.
(IANS)
