Belagavi: The Belagavi district administration has initiated action against an alleged unauthorised deposit collection scheme operated by Shivam Associates after preliminary investigations revealed suspected violations under the Karnataka Protection of Interest of Depositors (KPID) Act and the Banning of Unregulated Deposit Schemes (BUDS) Act.
The promoter Shivanand Neelannavar has been arrested.
Addressing reporters on Friday, Belagavi Deputy Commissioner Mohammad Roshan said market intelligence inputs and a detailed report submitted to him indicated that Shivam Associates was allegedly collecting deposits without authorisation from regulatory bodies such as SEBI or the RBI and also without approvals from the Cooperative Department.
“The firm had promised exorbitant returns through advertisements and attracted a large number of investors.
“Preliminary findings indicated that 35,000 people have invested in the scheme. Based on advertisements circulated by the firm, each investor was required to deposit a minimum of Rs 1 lakh, taking the suspected transaction volume to over Rs 50 crore. Exactly how much money is involved cannot be disclosed at this stage, but it is more than Rs 50 crore,” he said.
He added that the case may be handed over to the Criminal Investigation Department for further investigation.
An inquiry conducted by the Assistant Registrar of Cooperative Societies included inspections at four locations. The inquiry reportedly found prima facie evidence of irregularities, following which an FIR was registered at Malmaruti police station under Section 9 of the KPID Act and Sections 21(1) and (2) of the BUDS Act.
During searches, officials reportedly seized several documents related to financial transactions and depositors’ details.
“The firm failed to produce any regulatory licences or permissions for its operations,” he added.
Roshan said he received a detailed 150-page report on Friday evening, following which he forwarded the findings to the state government as required under the KPID Act. He said the government is expected to appoint a competent authority with powers to freeze bank accounts, seize properties and initiate further legal proceedings through a special court.
Warning the public against unregulated investment schemes, the Deputy Commissioner advised people to verify whether firms are registered with authorised regulatory bodies before investing money. He said lists of approved non-banking financial companies and regulated entities are available on the RBI website and cautioned that schemes promising unusually high monthly returns were often fraudulent.
Meanwhile, Police Commissioner Borase said that SEBI had received an anonymous letter about the firm. He said SEBI had sought inputs from the CID, which in turn contacted the local police.
Suspicion over the firm grew after its promoter, Neelannavar, allegedly claimed during a function in Udupi that he had 15,000 guns and that people were waiting in queue to invest.
“That itself was a red flag for us and prompted a detailed inquiry into the agency,” the Commissioner said.
He said police subsequently contacted the Securities and Exchange Board of India, which informed them that the firm was not registered with it. Officials from the Reserve Bank of India, Bengaluru, also shared details of registered non-banking financial entities, and the firm’s name was allegedly not found on the list.
Following this, police began monitoring social media platforms and found promotional messages circulating on WhatsApp claiming that investors would get good returns for example – Rs 3,000 on an investment of Rs 1 lakh.
The police also contacted several people who had invested in the scheme, though none of them had formally lodged complaints.
According to sources the firm had assured a payment of 36 percent was promised for a minimum investment of Rs 1 lakh.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: deccanchronicle.com
