ED attaches ₹427 crore in Karnataka ₹2,459 crore Ponzi scam probe
Synopsis
The ED has attached ₹427 crore in assets tied to an alleged ₹2,459 crore Ponzi scheme in Karnataka's Belagavi region — a fraud that reportedly lured over 35,000 investors with promises of 3% monthly returns. Stock market losses of ₹185 crore, funds routed through co-operative societies, and money transferred to family members paint a picture of systematic layering that investigators are still unravelling.
Key Takeaways
The ED, Mangaluru provisionally attached assets worth ₹427.16 crore under the PMLA, 2002 in connection with the alleged scam.
The Ponzi scheme allegedly collected ₹2,459.49 crore from over 35,000 investors , primarily in Belagavi, Karnataka .
The scheme was allegedly run through Shivam Associates , promising 3% monthly returns and a 0.5% referral commission .
A portion of investor funds was reportedly placed in high-risk stock market trading, resulting in net losses of ₹185.95 crore .
Attached assets cover 47 bank accounts , 42 properties , fixed deposits, and CDSL demat investments — about 17.4% of total alleged collections.
The investigation is ongoing; additional assets and beneficiaries may be identified.
The Enforcement Directorate (ED), Mangaluru has provisionally attached movable and immovable properties worth ₹427.16 crore belonging to Shivanand Siddappa Neelannavar and his associates in connection with an alleged large-scale Ponzi investment scam. The fraud allegedly involved collecting ₹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.
How the Alleged Scheme Operated
The accused allegedly ran the fraud through Shivam Associates and several associated entities, luring investors with promises of exceptionally high returns — 3% per month plus an additional 0.5% referral commission for recruiting new participants. The scheme reportedly relied on a network of referral agents, referred to internally as 'leaders', who were incentivised to mobilise fresh investors by guaranteeing assured and attractive returns. According to investigators, the classic hallmarks of a Ponzi structure — new investor funds used to pay earlier participants — were present throughout.
Where the Money Went
Investigators allege that funds collected from investors were diverted and layered through multiple channels to conceal their origin. A substantial portion was reportedly channelled into high-risk stock market trading, resulting in net losses of ₹185.95 crore. Approximately ₹25 crore was routed through Shreemata Co-operative Credit Society Ltd. and Dhanashree Multipurpose Co-operative Society Ltd. Around ₹19 crore was allegedly funnelled into Shivam Sevaa (OPC) Pvt. Ltd., one of several connected business entities that also include Shivam Lifeline Pvt. Ltd. and Shivam Foods.
The ED further alleges that investor funds were used to purchase agricultural land, residential properties, and plots. Money was also reportedly transferred to bank accounts belonging to the accused's wife and minor son.
What Was Attached and Seized
The provisional attachment — valued at ₹427,16,37,165 — covers 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 apartment bookings in developer projects, as well as stock market investments held through CDSL demat accounts. The ED had earlier frozen bank accounts and fixed deposits containing approximately ₹2.02 crore allegedly generated from investor funds. During searches, investigators seized documents, handwritten records, mobile devices, and other digital evidence.
Scale of the Investigation
The attached assets represent approximately 17.4% of the total alleged collections of ₹2,459.49 crore, a figure that underscores the considerable financial trail investigators are still working to trace. This comes amid a broader national pattern of co-operative society-linked investment frauds in semi-urban Karnataka, several of which have drawn ED scrutiny in recent years. The provisional attachment is designed to prevent the identified properties from being transferred or disposed of during legal proceedings, and will be subject to adjudication under the PMLA.
What Happens Next
The ED's investigation is ongoing, with the agency continuing to examine alleged fund diversions through family members, associates, co-operative societies, and connected business entities. Further investigation may lead to the identification of additional assets and beneficiaries. The scale of the alleged fraud — spanning 35,000-plus investors and nearly ₹2,459 crore — makes it one of the larger Ponzi cases to emerge from Karnataka in recent years.
Point of View
Referral-driven recruitment, and a Ponzi structure masked behind high monthly return promises. At 17.4% recovery of alleged collections, the ED's attachment — while significant — exposes the sheer difficulty of clawing back funds once layered across real estate, demat accounts, and family members. The deeper question is systemic: Karnataka's co-operative sector has repeatedly served as a conduit for such schemes, yet regulatory oversight of smaller credit societies remains thin. Without stronger state-level monitoring of co-operative finances, investigators will keep arriving after the bulk of the money has already moved.
NationPress
31 Oct 2026
Frequently Asked Questions
What is the Karnataka Ponzi scam and who is the accused?
The Karnataka Ponzi scam involves the alleged collection of ₹2,459.49 crore from over 35,000 investors, primarily in the Belagavi region, through Shivam Associates and associated entities. The principal accused is Shivanand Siddappa Neelannavar, who allegedly promised investors 3% monthly returns and a 0.5% referral commission.
What assets has the ED attached in this case?
The ED provisionally attached assets worth ₹427.16 crore, including fixed deposits, balances in 47 bank accounts, 42 properties (agricultural land, bungalows, apartment bookings), and stock market investments held through CDSL demat accounts. The agency had earlier frozen approximately ₹2.02 crore in bank accounts.
How were the investor funds allegedly used?
According to the ED, funds were diverted through multiple channels. A large portion was placed in high-risk stock market trading, leading to net losses of ₹185.95 crore. Money was also routed through two co-operative societies, transferred to family members' accounts, and invested in real estate and connected business entities.
What is a provisional attachment under the PMLA?
A provisional attachment under the Prevention of Money Laundering Act, 2002 temporarily freezes identified assets to prevent their transfer or disposal while an investigation is ongoing. The attachment is subsequently subject to adjudication by the PMLA Adjudicating Authority before it becomes permanent.
What happens next in the ED's investigation?
The investigation is continuing, with the ED examining alleged fund flows through family members, associates, co-operative societies, and linked business entities. Further probing may result in the identification of additional assets and beneficiaries beyond those covered in the current ₹427.16 crore attachment.
