Karnataka’s Criminal Investigation Department (CID) has blown the lid off one of the state’s largest financial frauds — a meticulously operated Ponzi scheme that allegedly collected nearly Rs 2,400 crore from over 40,000 unsuspecting investors across Karnataka and Maharashtra.
The Accused and the Scheme
The fraud was allegedly operated by Shivananda Neelannavar, who ran an unregulated deposit racket by promising high returns and sustaining payouts through continuous inflows from new investors — a classic Ponzi structure.
CID Deputy Inspector General of Police Bhimashankar Guled, addressing a press briefing, confirmed there is clear prima facie evidence of fraud, stating that the accused continued the scheme well beyond sustainable limits, masking mounting liabilities through a chain-like structure.
How the Money Was Used — and Lost
The financial trail reveals a complex web of diversion and losses. Of the Rs 2,400 crore collected, a portion was returned to investors, while about Rs 540 crore was diverted into stock market investments, resulting in losses of around Rs 170 crore. Authorities estimate the net shortfall stands at Rs 660 crore, with nearly Rs 330 crore expected to be recovered through ongoing attachment and recovery proceedings.
An associate of the accused allegedly siphoned off Rs 55 crore into personal accounts, deepening the scale of fund diversion.
Scale of the Fraud
The numbers are staggering:
- Over 40,700 investors affected, many from Karnataka and neighbouring Maharashtra
- Rs 2,400 crore collected from the public
- Rs 660 crore estimated shortfall
- 30 bank accounts identified, with seven handling the bulk of transactions — one account alone containing more than 36,000 pages of transaction records
CID Action: Seizures and Arrests
The CID has intensified attachment proceedings, seizing five luxury vehicles and moving to confiscate 11 more, while tracing assets linked to the accused. Despite the registration of an FIR, investigators found that Rs 4–5 crore continued to be deposited into related accounts, suggesting residual operations even during the probe phase.
The CID has also indicated that individuals linked to film personalities may be questioned as part of the widening probe into fund flows and beneficiary links.
What Happens Next
The case has been transferred to the authority under the Banning of Unregulated Deposit Schemes (BUDS) Act, headed by Aditya Amlan Biswas, who will oversee asset recovery and distribution of funds to victims as investigators continue tracing remaining proceeds of the alleged scam.
A Warning to Investors
This case is a stark reminder that schemes promising unusually high returns are almost always too good to be true. Investors are urged to verify any deposit scheme with SEBI or RBI before investing.
Source: UNI