Even after the arrest of Shivam Associates promoter Shivanand Neelannavar and the ongoing investigation into the alleged multi-crore deposit scam, people are still depositing money into accounts linked to the firm, prompting the CID to issue a fresh public warning.
Addressing a media briefing in Belagavi, Dr Bheemashankar S. Guled, Deputy Inspector General of Police, Economic Offences Wing, CID, urged the public not to deposit any money into Shivam Associates accounts.
“The accounts have only been debit-frozen. Credits are still possible. We are finding that some people continue to deposit money. We strongly request the public not to transfer any funds to Shivam Associates,” he said.
No Permission to Collect Public Deposits
Guled said a key issue under investigation is whether Shivam Associates had any legal authority to collect deposits from the public.
“Anyone promising returns of 36%, 60% or similarly high profits is operating outside normal financial norms. Such returns are neither feasible nor permitted under RBI regulations,” he said.
According to the CID, Neelannavar allegedly described the funds received from investors as “hand loans”, but investigators believe the transactions effectively constitute public deposits, bringing the matter under the provisions of the Karnataka Protection of Interest of Depositors (KPID) Act.
Classic Ponzi Structure
The CID’s investigation indicates that the operation followed a classic Ponzi model, in which funds collected from new investors were used to pay returns to earlier investors.
“High returns attracted people. The scheme continued as long as fresh money kept coming in. Once new investments stop, such a pyramid inevitably collapses,” Guled said.
Investigators estimate that approximately Rs 2,400 crore was collected from investors. While substantial amounts were distributed as interest and payouts, the CID has found no evidence of any legitimate business activity generating profits sufficient to support the promised returns.
“The fundamental question is: where was the profit coming from? Our investigation has not found any business capable of generating such returns. Payments were largely being made from fresh deposits received from new investors,” Guled said.
Massive Stock Market Losses
The CID revealed that around Rs 540 crore of investor money was invested in the stock market. Of this, approximately Rs 170 crore was lost after positions were exited at a loss.
Investigators have also traced funds diverted into various other businesses, though none appear to have generated profits sufficient to sustain the promised payouts.
According to preliminary findings, there is currently a shortfall of nearly Rs 660 crore in the scheme.
Assets Worth Hundreds of Crores Traced
The CID said assets worth more than Rs 400 crore, along with around 250 grams of gold, have already been identified and secured as part of the recovery process.
Officials believe an additional Rs 300 crore may potentially be recovered through bank accounts, gold holdings, luxury vehicles and real estate assets linked to the accused and associated entities.
Under the KPID Act, a Competent Authority has been appointed and will oversee attachment, liquidation and eventual distribution of recovered assets to eligible investors.
Luxury Cars Bought with Depositors’ Money
The investigation has also uncovered substantial transfers from company accounts to personal accounts.
CID officials stated that approximately Rs 55 crore was transferred from company accounts into Neelannavar’s personal accounts.
The agency has seized several luxury vehicles allegedly purchased using investors’ money, including:
- Toyota Vellfire
- Land Rover Defender
- Two Mercedes-Benz vehicles
- Volvo XC90
Investigators said a total of 19 vehicles linked to the network have been traced, many of them registered outside Karnataka.
“This is public money collected from depositors. It cannot be diverted for personal luxury purchases,” Guled said.
40,700 Investors Identified
The CID has identified approximately 40,700 investors linked to Shivam Associates since its operations began in 2016.
The highest number of investors is reportedly from neighbouring Maharashtra, followed by Karnataka and other states.
Notices to Investors and Beneficiaries
CID officials said notices will be issued to individuals who received large payouts from Shivam Associates.
“If any person has received more money than they originally invested—whether termed interest, referral commission, incentive or by any other name—that amount may be subject to recovery under the law,” Guled said.
The CID will also issue notices to various individuals and entities that received payments from Shivam Associates to gather further information regarding fund flows.
Probe Expands Across 30 Banks
The scale of the investigation continues to grow.
Officials revealed that transactions across nearly 30 banks are being scrutinized. Seven accounts have been identified as having particularly high transaction volumes.
In one account alone, the bank statement reportedly runs to more than 36,000 pages, highlighting the complexity of the financial trail.
The CID has confirmed that all relevant documents and findings will be shared with the Income Tax Department and the Enforcement Directorate for further action wherever required.
“This is a massive investigation involving thousands of transactions and tens of thousands of investors. It will take time. As and when evidence emerges, every transaction and every beneficiary will be investigated,” Guled said.
The CID has once again appealed to the public to immediately report any individual or company promising unusually high and unrealistic returns, either to the CID or the nearest police station. Such early reporting, officials say, can help prevent future financial frauds before they reach the scale witnessed in the Shivam Associates case.