CID exposes Rs 2,400-crore ponzi scheme in Karnataka; Over 40,00 investors affected in fraud case

The Crime Investigation Department (CID) has officially exposed an alleged large-scale financial fraud mastermind by Shivananda Neelannavar, uncovering a sophisticated Ponzi scheme that has affected thousands of investors. Addressing a press conference on Saturday, CID Deputy Inspector General (DIG) of Police Bhimashankar Guled outlined the extent of the fraud and the measures being taken to recover the funds.

"It has been proven that Shivananda Neelannavar has committed fraud. He was running a Ponzi scheme, using money from new investors to pay interest to earlier investors. He continued this until the interest payouts exceeded the fresh collections," Guled said, news agency ANI reported.

According to the investigation, Neelannavar mobilised nearly Rs 2,400 crore from investors. While a substantial amount has already been repaid, around Rs 540 crore was channelled into stock market investments, resulting in losses of approximately Rs 170 crore. The probe has identified a deficit of Rs 660 crore, of which officials believe nearly Rs 330 crore can still be recovered. Investigators have also found that about 40,700 individuals invested in the scheme.

Involvement of an associate

The inquiry further revealed the involvement of an associate who allegedly transferred Rs 55 crore from the company to personal accounts. Authorities have seized five luxury vehicles and are in the process of confiscating 11 more. Officials said an additional Rs 400 crore has been returned to investors so far.

"We will recover that money and distribute it to the remaining investors," Guled said. "After the FIR was registered, Rs 4 to 5 crore was still deposited. We have found 30 bank accounts, of which 7 accounts received most of the money. One single account has 36,200 pages of transactions, and the investigation is ongoing," he stated.

Over the claim of routed money to movie stars through the associate, Guled said, "We will issue notices to them and summon them for questioning." The highest investment has arrived from neighbouring Maharashtra. "We are investigating with the cooperation of Maharashtra police," he added.

Following the recovery process, the case has been transferred to Aditya Amlan Biswas, who heads the authority under the Banning of Unregulated Deposit Schemes (BUDS) Act. According to Guled, Biswas will supervise the distribution of recovered funds to investors. He also noted that the district administration had conducted a raid on the company and initiated legal proceedings before the scheme eventually collapsed.