Belagavi (Karnataka), May 16 (PTI) The owner of a private investment firm here has been arrested following a major crackdown on suspected multi-crore investment fraud and alleged unregulated financial activities, officials said on Saturday.

Shivanand Neelannavar, owner of Shivam Associates, has been taken into custody for further probe, they said.

The action comes after the Belagavi district administration and police uncovered a suspected investment fraud linked to the firm, which is alleged to have collected funds from thousands of investors without valid approvals from the RBI or the SEBI.

Speaking to reporters here, Belagavi Police Commissioner Borase Bhushan Gulabrao said that an inquiry was conducted into Shivaam Associates. Based on the inquiry, a complaint was filed on Friday evening at Malmaruti Police Station.

A case has been registered under the KPID (Karnataka Protection of Interest of Depositors in the Financial Establishments) Act and the BUDS (Banning of Unregulated Deposit Schemes) Act in this regard, he said.

"The owner of the firm has been secured and will be produced before the court. Police will seek judicial custody as well as police custody for further investigation," Gulabrao said.

Prima facie, the commissioner said that around 35,000 people are believed to have invested money in the firm. Prima facie, the firm was not registered with the RBI or SEBI.

At this stage, the exact number of investors and the total amount involved cannot be confirmed. However, it is suspected to be a multi-crore fraud. The exact figures can be ascertained only after a detailed audit, he said.

"A thorough analysis by professionals, including chartered accountants and technical experts, is required. Only after that can the full extent of the alleged fraud be conclusively determined. So far, no direct complaints have been received from members of the public," he added.

Belagavi Assistant Commissioner Shravan Nayak said acting on the directions of the Deputy Commissioner (Mohammad Roshan), officials from the revenue department, Cooperative Societies department and police conducted a search at Shivam Associates and examined documents and laptops at the firm’s office premises.

During the inquiry, officials found that the firm was allegedly collecting unsecured hand loans from the public through informal agreements, without following regulatory norms prescribed by RBI or SEBI, he told reporters here.

A report has been submitted to the Deputy Commissioner, who has in turn written to the government regarding the matter, the officer added.

The official further said that, based on directions from the Deputy Commissioner, the Cooperative Societies department lodged a complaint at Malmaruti police station, following which police initiated action against the firm owner. Investigation is underway.

Police and district authorities have taken preventive steps based on “market intelligence” inputs to avoid any cascading effect arising out of the alleged unregulated financial activity, the officer added. PTI AMP ROH

Unregulated deposit schemes and suspected investment fraud trigger action against a private investment firm owner. Suspected investment fraud and unregulated deposit activity led to action against a private investment firm owner after district and police authorities found prima facie indications that funds had been collected from a large number of investors without valid approval from the RBI or SEBI. A case was registered under the Karnataka Protection of Interest of Depositors in Financial Establishments Act and the Banning of Unregulated Deposit Schemes Act, and the owner was taken into custody for further investigation. Officials also searched the firm's premises, examined records and laptops, and reported alleged collection of unsecured hand loans through informal agreements.