Belagavi police arrest key accused in Rs 4,500-crore investment scam, case likely to be handed over to CID
Belagavi investment scam probe intensified after police arrested Shivam Associates founder over alleged illegal deposit collection and cheating.
Shivanand Neelanavar has been arrested over allegations of illegal fund collection and cheating (Photo: Special arrangement). The Belagavi police Friday arrested Shivanand Neelanavar, the prime accused in an alleged Rs 4,500-crore investment scam affecting thousands of depositors across north Karnataka. Meanwhile, the Karnataka government Saturday said it, in all likelihood, will hand over the case to the Criminal Investigation Department (CID).
The arrest followed the registration of a First Information Report (FIR) against Neelanavar over illegal fund collection and cheating through an investment scheme that allegedly promised unusually high returns to depositors.
According to investigators, the case centres around Neelanavar’s firm Shivam Associates, which is suspected to have mobilised deposits from nearly 35,000 people without mandatory approvals from financial regulators or the Reserve Bank of India (RBI).
The police suspect that the organisation functioned in a Ponzi-style manner, where returns to earlier investors may have been paid using funds collected from new depositors.
“Preliminary investigation indicates that crores of rupees were collected from the public without proper authorisation. We are examining the financial transactions, digital evidence, and possible violations of RBI norms,” a senior police officer said.
The scam surfaced after several investors approached authorities, alleging delays in repayments and irregularities in the scheme. Following complaints, officials from the district administration, cooperation department, and revenue department initiated a preliminary inquiry, after which a case was registered at the Malamaruti police station.
Belagavi Deputy Commissioner Mohammed Roshan had earlier ordered an inquiry under the Karnataka Protection of Interest of Depositors in Financial Establishments Act to safeguard depositors’ interests.
Based on the Deputy Commissioner’s directions, a special team comprising officials from the Belagavi City Police, revenue department, Registrar of Companies and other departments was constituted to investigate the matter and submit a detailed report.
The police conducted searches over the last two days at multiple premises linked to the accused, including his residence, office, and apartment complex in Belagavi. During the raids, investigators reportedly seized bank records, bonds, laptops, mobile phones, and digital transaction data connected to the alleged operations.
The raids were carried out by officials from the revenue department, cooperation department and local police under the supervision of Assistant Commissioner Shravan Kumar.
Neelanavar was questioned extensively before being formally taken into custody. He is expected to be produced before a local court, and the police are likely to seek custody for further interrogation.
Investigators said Neelanavar is originally from Hubballi and had earlier worked in small-scale jobs before allegedly entering the investment business. The police said he later launched an app-based investment platform and expanded his operations through social media campaigns, public outreach programs, and local influence networks.
A police officer said they suspect large-scale unauthorised deposits were mobilised over several years through associated firms and investment schemes that promised high monthly returns. Investigators are also examining possible violations under the Karnataka Protection of Interest of Depositors (KPID) Act and the Banning of Unregulated Deposit Schemes (BUDS) Act.
Officials said the firm allegedly failed to comply with RBI norms while mobilising deposits from the public.
“We are verifying the extent of the financial network, investor exposure, and whether more individuals or firms were involved in the operations,” the officer added.
The CID is expected to conduct a detailed investigation into the alleged multi-crore financial fraud and trace the flow of funds collected from investors.
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