Dieter Frerichs, managing director of K1 group funds K1 Global and K1 Invest, shot himself in Spain as local police attempted to detain him following an order to extradite him back to Germany.
Mr Frerichs was one of four suspects accused of defrauding investors of more than â¬300 million ($376 million), reports the Financial Times.
In a civil suit filed last December, BNP Paribas said it had lost around $70 million to the scheme, while JPMorgan revealed it was owed about $82 million.
The alleged ringmaster was Helmut Kiener - a former adviser to K1 who has denied any wrongdoing - who is alleged to have paid for a lavish lifestyle using money he had told investors he would put into funds for them.
Last month, three men accused of running the UK's largest-ever Ponzi scheme were ordered to pay Â£115 million ($174 million) to the Financial Services Authority.
It was established that John Anderson, Kautilya Nandan Pruthi and Kenneth Peacock were accepting investors' deposits without the authorization of the regulator.
By Asim Shah