CID to Probe Multi-Crore Deposit Fraud Case In Karnataka’s Belagavi; Shivam Associates Owner Arrested
This massive multi-crore financial fraud case is now been handed over to the CID for further investigation and Malamaruti police arrested Neelannavara on Friday night.
Published : May 16, 2026 at 10:44 PM IST
Belagavi: Police have arrested Shivananda Neelannavara, owner of Shivam Associates, for allegedly collecting illegal deposits from thousands of people by promising unusually high returns.
This massive multi-crore financial fraud case is now been handed over to the CID for further investigation and the Malamaruti police arrested Neelannavara on Friday night.
According to officials, the accused allegedly collected deposits from nearly 35,000 people without complying with guidelines laid down by the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), or the Cooperative Department.
Belagavi Deputy Commissioner Mohammad Roshan said the case is a serious inter-district and inter-state fraud, which involves more than Rs 50 crore.
“This is not just a district-level case. During searches conducted at his house and office, several bonds, cheques, lists of depositors, and money transfer documents were recovered,” the Deputy Commissioner said during a press conference on Saturday.
Police said Neelannavara was a driver and then sold ice creams. He eventually started his own ice cream factory, which reportedly incurred losses. Officials allege he then gradually started collecting deposits from people.
A case has been registered against him under Section 9 of the Karnataka Protection of Interest of Depositors (KPID) Act and Sections 21(1) and 21(2) of the Banning of Unregulated Deposit Schemes (BUDS) Act.
Authorities said that they found no valid licence for operating such a financial scheme during their search operation.
The Deputy Commissioner said a 150-page report prepared by the Sub-Divisional Assistant Commissioner had already been submitted to the state government. He added that the state government would appoint a nodal officer empowered to freeze bank accounts and confiscate movable and immovable assets linked to the case.
Officials also confirmed that a special court has been constituted for the matter.
The administration has urged depositors to approach the authorities and submit details regarding their investments.
“We are monitoring all those associated with Neelannavara. Notices will be issued to everyone. Protecting depositors is our first priority,” Roshan said.
According to investigators, Neelannavara allegedly promised investors annual returns of up to 36 percent and encouraged people to deposit a minimum of Rs 1 lakh. Officials said many investors allegedly sold land and other assets to invest money in the scheme.
The exact amount involved is yet to be determined, and investigators are currently tracing where the deposited funds were diverted.
Belagavi City Police Commissioner Bhushan Borase said the case first came to light after an anonymous complaint was reportedly sent to SEBI, which later alerted authorities.
During the investigation, police found that Shivam Associates was not registered with the RBI. Authorities said the company had gained popularity through social media campaigns claiming that investors would receive Rs 3,000 monthly returns on deposits of Rs 1 lakh.
Police alleged that Neelannavara regularly paid returns initially, which prevented investors from suspecting fraud. Investigators also said that blank cheques were issued to depositors to gain their trust.
Officials examining the accused’s financial records reportedly found balance sheets with transactions worth Rs 300 to Rs 400 crore. Neelannavara allegedly said that the funds had been invested in the stock market, real estate, fisheries, and social services.
Police further said the accused has not been cooperating with the investigation and would be taken into custody for detailed questioning.
Commissioner Borase also shared that authorities became more suspicious after Neelannavara allegedly made claims during a public speech about possessing 15,000 firearms, which led the recommendations to transfer the case to the CID.
Meanwhile, the district administration warned citizens against falling for unauthorized high-interest investment schemes.
Deputy Commissioner Roshan said a special scam-monitoring cell had been established at the District Collector’s office on April 29 in coordination with agencies enforcing the KPID and BUDS Acts.
“We have repeatedly advised the public not to trust unauthorized Ponzi schemes promising high returns. People should verify whether a company is registered with RBI or other authorized agencies before investing money,” he said.
The CID is expected to conduct a detailed investigation into the alleged financial scam and identify the full extent of investor losses.
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