Authorities tell Eyewitness News that Mark Madoff, 46, was found hanging by a dog leash wrapped around a ceiling pipe in his living room at his SoHo apartment.
The body was discovered at about 7:27 a.m. by his father in law who summoned police and emergency medical technicians to the scene.
Madoff was home with one of his two young children, investigators said. His 2-year-old son was sleeping in the next bedroom. The other child was out with his wife, Stephanie, at the time.
Initially, it appeared no note had been found inside the fourth floor apartment at 8 Mercer Street.
In a statement, Mark Madoff's attorney, Martin Flumenbaum, said, "This is a terrible and unnecessary tragedy. Mark was an innocent victim of his father's monstrous crime who succumbed to two years of unrelenting pressure from false accusations and innuendo. We are all deeply saddened by this shocking turn of events."
Mark Madoff and his brother, Andrew, were under investigation but hadn't faced any criminal charges in the massive Ponzi scheme that led to their father's jailing.
Bernard Madoff swindled a long list of investors out of billions of dollars and is serving a 150-year prison term in North Carolina. He was arrested on Dec. 11, 2008, after confessing his crimes to his family.
Madoff's sons, according to the family's attorneys, were the ones who turned him in.
The scandal put a harsh light on members of the family. The financier's brother, Peter, played a prominent role in the family's company. Mark and Andrew Madoff both worked on a trading desk at the firm, on a side of the business that wasn't directly involved in the Ponzi scheme.
A year ago, the court-appointed trustee trying to unravel Madoff's financial affairs sued several relatives, including Peter, Mark and Andrew, accusing them of failing to detect the fraud while living lavish lifestyles financed with the family's ill-gotten fortune.
The lawsuit accused Mark Madoff of using $66 million he received improperly to buy luxury homes in New York City, Nantucket and Connecticut.
In February, Mark Madoff's wife petitioned a court to change her last name and the last names of her children, saying her family had gotten threats and was humiliated by the scandal.
Calls to the FBI and U.S. Attorney's office were also not immediately returned. Previously, spokespeople for the brothers had repeatedly denied that they had any knowledge of their father's crimes.
Police investigators were at Madoff's apartment Saturday morning, along with officials from the medical examiner's office, which will determine the cause of death.