ED Freezes ₹427 Crore in Karnataka Ponzi Scheme Investigation

The Enforcement Directorate has taken decisive action in Karnataka's Ponzi scheme case, seizing assets worth ₹427 crore linked to the main accused and their associates. This investigation reveals a complex web of fraud affecting over 35,000 investors, with promises of unrealistic returns and a vast network of agents. The ED continues to probe further financial transactions and undisclosed properties associated with the case. Discover the details of this significant crackdown on financial crime.

By Narendra Chaudhary Oct 31, 2026, 19:50 IST

Major Action by ED in Karnataka Ponzi Scheme

In Bengaluru, the Enforcement Directorate (ED) has taken significant steps against a high-profile Ponzi investment scam in Karnataka, seizing approximately ₹427.16 crore in movable and immovable assets linked to the main accused, Shivanand Siddappa Neelannavar, and his associates. This operation was conducted under the stringent provisions of the Prevention of Money Laundering Act (PMLA), 2002. The scam, which has affected over 35,000 innocent investors, is associated with fraudulent activities amounting to ₹2,459.49 crore in the Belagavi region and surrounding areas.

According to an official statement from the agency, the accused operated a well-organized and enticing Ponzi scheme through 'Shivam Associates' and other affiliated entities. They lured investors with promises of an extraordinary and unrealistic monthly return of 3%. Additionally, they offered a 0.5% referral commission for bringing in new investors. This elaborate fraud was propagated through a vast network of agents known as 'Leaders,' who were incentivized with attractive financial rewards for recruiting more participants.

The investigation revealed shocking details about how the funds raised from investors were concealed and legitimized through various fake accounts, entities, and financial channels. A significant portion of the collected money was invested in high-risk stock markets, resulting in a substantial loss of ₹185.95 crore for the accused. Furthermore, around ₹25 crore was diverted through the banking accounts of Shrimata Cooperative Credit Society Limited and Dhanashree Multi-Purpose Cooperative Society Limited. Much of the hard-earned money from investors was funneled into the personal accounts of the accused's wife, minor son, and relatives, leading to the purchase of expensive land and properties.

During the financial investigation, the ED uncovered illegal funds in the accounts of several associated business entities, including Shivam Seva (OPC) Private Limited, Shivam Lifeline Private Limited, and Shivam Foods, with approximately ₹19 crore transferred to Shivam Seva's account alone. Previously, the ED had frozen numerous documents, handwritten records, digital devices, and ₹2.02 crore in deposits during extensive search operations. The recently seized assets of ₹427.16 crore represent about 17.4% of the total scam amount. The central investigative agency continues to delve into other financial transactions and undisclosed properties linked to associates, relatives, and cooperatives involved in this case.