Son of a railway employee who started off as a vegetable and fruit vendor in trains, Telgi, 56, was battling for life for about a week.
He was on life support system after being admitted to Victoria Hospital for meningitis, doctors said.
Telgi, who died while serving his sentence at the Central Prison in Bengaluru, is survived by wife, daughter and son-in-law.
After his arrest in Ajmer in November 2001 in connection with the fake stamp paper scam, Telgi was sentenced to 30 years’ rigorous imprisonment by a court five years later.
He was also slapped with a fine of Rs 202 crore.
Telgi ran his fiefdom in counterfeit stamp papers for almost a decade till he ran out of luck in 2001 when his network was busted, leading to his arrest.
The security and intelligence agencies had then put the size of the scam at a mind-boggling Rs 20,000 crore. However, some other estimates ranged from Rs 3,000 crore to Rs 30,000 crore.
The scam had affected the financial and other markets.
Hailing from Khanapur in Belagavi district in Karnataka, Telgi received his education in the local Sarvodaya Vidyalaya, an English-medium school, following which he had obtained a B.Com degree from a college in Belagavi.
Later, he moved to Saudi Arabia. When he returned after seven years, he got into the counterfeit business.
Acquiring a stamp paper licence in 1994, Telgi opened an office at Mint Road in Mumbai. He was said to have befriended several officials in the revenue ministry, stamp office and Nashik Security Press where stamp papers were printed.
Telgi was also accused of having used his political clout to get the machinery at the Nashik press declared as 'junk' only to buy it and setting it up at his office in Mumbai.
He also allegedly obtained the original dye for printing in connivance with Nashik press security officials and began printing fake stamp papers.
After the scam was busted, the investigation agencies discovered that he ran the business like a mega industry by recruiting 350 agents. They had sold the duplicate stamp papers of various denominations in bulk to banks, insurance companies, stock brokerage firms and corporate houses.
Top police officers and people in power were alleged to be his accomplices.
During the narco-analysis test, he had allegedly named some influential people as his partners in crime.
The arrest of two men transporting fake stamp papers in Bengaluru in 2000 had led to the unearthing of the scam.
Telgi had then claimed he was a small part of a huge scam involving some politicians and bureaucrats.
However, investigations had not brought to fore any such aspect.
The Karnataka government constituted an investigation team called 'STAMPIT' but as the countrywide network of the scam unfolded, the probe was taken over by the CBI.
In his first conviction in 2006 under the Maharashtra Control of Organised Crime Act and Indian Penal Code 120 (criminal conspiracy), Telgi was sentenced to 10 years rigorous imprisonment and for the remaining 20 years in four different cases.