₹4,500 Crore Investment Scam in Karnataka: Belagavi Police Arrest Main Accused as CID Probe Likely
The Belagavi ( Belgam)Police on Friday arrested Shivanand Neelanavar, the alleged mastermind behind a massive investment scam estimated to be worth nearly ₹4,500 crore.
The fraud is believed to have affected thousands of depositors across several districts of north Karnataka, many of whom had invested their life savings in hopes of earning high financial returns.
As the scale of the alleged fraud continues to unfold, the Karnataka government indicated on Saturday that the case is likely to be transferred to the Criminal Investigation Department (CID) for a more comprehensive and specialised investigation.
The action against Neelanavar came after police registered a First Information Report (FIR) accusing him of illegally collecting deposits and cheating investors through financial schemes that allegedly promised unusually high and unrealistic returns.
Investigators say the case revolves around Neelanavar’s company, Shivam Associates, which allegedly collected deposits from nearly 35,000 individuals without obtaining the necessary approvals from financial regulatory authorities or the Reserve Bank of India.
According to the police, preliminary findings suggest that the firm may have operated in a Ponzi-like structure, where payouts to older investors were allegedly made using money collected from newer depositors instead of legitimate business profits.
Officials involved in the investigation said large sums of money appear to have been mobilised from the public without legal authorisation.
Authorities are now closely examining financial transactions, digital records, and potential violations of RBI guidelines and financial regulations.
The alleged scam came to light after multiple investors approached authorities claiming that repayments had been delayed and that serious irregularities had surfaced in the functioning of the investment scheme.
As complaints increased, officials from the district administration, revenue department, and cooperation department initiated a preliminary inquiry into the operations of the firm.
Following the initial findings, a case was formally registered at Malamaruti Police Station in Belagavi.
Earlier, Belagavi Deputy Commissioner Mohammed Roshan had directed authorities to conduct an inquiry under the Karnataka Protection of Interest of Depositors in Financial Establishments Act. The move was aimed at protecting the interests of thousands of investors who are feared to have suffered heavy financial losses.
Based on the Deputy Commissioner’s instructions, a special investigation team was formed comprising officers from the Belagavi City Police, the revenue department, the Registrar of Companies, and other government agencies.
The team was tasked with carrying out a detailed probe into the financial activities of the accused and submitting a comprehensive report.
Over the last two days, police teams conducted extensive raids at several properties linked to Neelanavar, including his residence, office premises, and apartment complex in Belagavi.
During the searches, officials reportedly seized important documents and electronic evidence, including bank records, financial bonds, laptops, mobile phones, and digital transaction data believed to be connected to the alleged scam network.
The search operations were jointly carried out by officials from the police department, cooperation department, and revenue authorities under the supervision of Assistant Commissioner Shravan Kumar.
After prolonged questioning, Neelanavar was formally taken into custody. Police officials said he is expected to be produced before a local court shortly, and investigators are likely to seek his custodial interrogation to gather further information regarding the financial transactions and possible involvement of others.
According to investigators, Neelanavar originally hails from Hubballi and had reportedly worked in small-scale occupations before entering the investment business.
Authorities claim he later built an extensive app-based investment network and aggressively promoted his schemes through social media campaigns, public events, and local influence channels.
Police suspect that over the years, large amounts of unauthorised deposits were mobilised through multiple associated firms and investment schemes that allegedly promised high monthly returns to attract investors.
Investigators are also examining possible offences under the Karnataka Protection of Interest of Depositors (KPID) Act as well as the Banning of Unregulated Deposit Schemes (BUDS) Act.
Authorities believe the company may have violated several financial regulations while accepting public deposits without mandatory approval from the RBI and other regulatory bodies.
Officials involved in the probe said they are now trying to determine the full extent of the financial network, assess the exposure faced by investors, and identify whether additional individuals, agents, or companies were connected to the alleged operations.
With the Karnataka government considering a CID takeover, the investigation is expected to intensify further.
Authorities are likely to trace the movement of funds, examine the money trail in detail, and determine how the alleged multi-crore investment network operated across the region.
For thousands of affected investors, many of whom reportedly trusted the scheme with their hard-earned savings, the focus now remains on whether authorities will be able to recover the money and bring all those responsible to justice.
