An Ex Bank CEO Now Sued For Allowing Money Laundering
A former compliance officer at Flagstar Financial has filed a federal lawsuit against the bank and its former CEO, Alessandro “Sandro” DiNello, alleging serious ethical and legal violations, including money laundering, insider trading, and inappropriate workplace behavior.
The plaintiff, Ross Marrazzo, claims he was wrongfully terminated in September 2024 for investigating DiNello’s suspicious financial activities and reporting workplace misconduct, in violation of federal whistleblower protections.
Ross Marrazzo, a 40-year veteran in regulatory compliance, served as Flagstar’s enterprise chief compliance officer from 2022 until his termination in 2024.
According to the lawsuit filed on July 29, 2025, in the U.S. District Court for the Eastern District of New York, Marrazzo was investigating a $5 million transfer made by DiNello to an LLC owned by an unidentified millionaire, followed by a $1.7 million repayment from the same individual’s personal account.
The suit alleges these transactions lacked proper documentation, raising concerns about potential money laundering or insider trading.
Marrazzo claims DiNello admitted to lending the money to a longtime friend but provided no further justification.
The lawsuit further alleges that DiNello interfered with an investigation into a bank customer’s alleged money laundering activities.
When Marrazzo raised these issues, DiNello reportedly threatened to fire him, stating, “I would fire you if you did [it again].”
Following this, Marrazzo was excluded from executive meetings and terminated before he could complete his investigation or report findings to regulators.
The suit, filed under the Sarbanes-Oxley Act, argues that his firing was retaliatory and aimed at suppressing evidence of DiNello’s misconduct.
Workplace Misconduct Allegations
In addition to financial impropriety, the lawsuit details an incident in early 2024 during a virtual meeting with the law firm Skadden, Arps, Slate, Meagher & Flom.
According to the complaint, DiNello discussed sensitive, nonpublic company information while a junior employee was “clearly visible sitting on his lap and rubbing his head.”
Another executive reported the incident to Marrazzo, providing screenshots as evidence.
Marrazzo flagged the event as both a potential human resources violation due to an inappropriate workplace relationship and a regulatory concern over the disclosure of confidential information to an unauthorized employee.
Marrazzo reported the incident to the chair of Flagstar’s audit committee, which hired the law firm Cravath, Swaine & Moore to investigate.
However, the board dismissed the incident as a “misdemeanor,” citing a lack of specific company policy prohibiting such behavior and concerns that firing DiNello could lead to a costly lawsuit from him.
No disciplinary action was taken against DiNello.
Alessandro DiNello, 69, joined Flagstar Bank in 1979, serving in various roles, including president and CEO from 2013 until its acquisition by New York Community Bancorp (NYCB) in December 2022.
Following the merger, NYCB adopted the Flagstar name in 2023.
DiNello served as non-executive chairman before briefly taking on the roles of president and CEO from February to April 2024, during a turbulent period for the bank.
In March 2023, Flagstar acquired a significant portion of the failed Signature Bank’s assets for $2.7 billion, pushing it over the $100 billion-asset threshold and subjecting it to stricter regulatory oversight.
In early 2024, Flagstar faced financial strain, reporting a $252 million quarterly loss and unexpected losses on commercial real estate loans.
A $1.05 billion capital injection led by former Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital helped stabilize the bank.
DiNello stepped down as CEO in April 2024, succeeded by Joseph Otting, but he remains a board member and senior adviser.
Marrazzo’s Claims and Demands
Marrazzo, 67, alleges that Flagstar breached his employment contract by failing to pay him $333,333 in severance based on his $500,000 annual salary and the 36 weeks remaining on his contract at the time of his termination.
He is seeking reinstatement, back pay, compensatory damages for emotional distress and reputational harm, and attorneys’ fees.
Marrazzo’s attorney, Michael Willemin, stated, “When banks and bankers engage in shady behavior, financial industry consumers pay the price.”
Neither DiNello nor Flagstar responded to requests for comment on the lawsuit.
The allegations come at a time when Flagstar is undergoing significant restructuring, including the sale of its $1.3 billion mortgage business to Mr. Cooper in November 2024.
The bank reported a $70 million net loss in Q2 2025, a 78% improvement from the prior year, but it continues to face challenges in diversifying its loan portfolio and strengthening its risk management framework.
The lawsuit raises broader questions about corporate governance and accountability in the banking sector, particularly at institutions navigating rapid growth and regulatory scrutiny.
Marrazzo’s claims, if substantiated, could prompt further investigations into Flagstar’s compliance practices and leadership culture.
For now, the case underscores the critical role of whistleblowers in maintaining transparency and integrity in financial institutions.
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