Naseer Khan, the lead actor and co-producer of Hindi movie Shadow, was on Tuesday arrested in Cuttack for his alleged involvement in a multi-crore chit fund scam in Balasore district.

He was later released by the Orissa High Court on a personal surety of Rs 25,000. The visually challenged Khan has been accused by the Orissa Criminal Investigation Department (CID) of using chit fund money to make the movie.

In August, the CID along with Balasore police busted the chit fund scam, involving several companies and multi-level marketing firms. According to the police, people were allegedly duped of about Rs 191 crore. The scheme came with offers for prospective investors, who were promised special discounts for introducing two other depositors.

Last month, the CID lodged a case against Khan after they found evidence that the chit fund scam was used to make Shadow. Khan was in Cuttack in connection with a writ petition in the High Court challenging the CID’s accusation.

CID SP Santosh Bala said Khan was arrested in the morning near Kathjodi river. But hopes of the cops suffered a setback when the High Court released him. “The court was led to believe that we arrested Khan from the High Court premises where he had come to meet his lawyer,” said Bala. “But he was not arrested from the HC premises..” Khan was released because of his “illegal arrest”.

Besides Great Entertainment, his production company, Khan was one of the directors of Fine India, a chit fund company that allegedly siphoned crores from investors. Though Khan quit as its director some time back, the police had information that money was transferred to a Kanpur-based company from where it was channelled to Mumbai, officials said. The firm later closed its operations in Balasore.