The Flagstar Bank CEO money laundering lawsuit was filed in July 2025 by Ross Marrazzo, the bank’s former enterprise chief compliance officer, who alleges he was fired in September 2024 to shut down his investigation into former CEO Alessandro “Sandro” DiNello’s personal financial dealings and his interference with an anti-money laundering probe of a bank client. The case, Marrazzo v. Flagstar Financial, Inc. and Alessandro DiNello, is pending in the U.S. District Court for the Eastern District of New York, where Flagstar has moved to dismiss.1CourtListener. Marrazzo v. Flagstar Financial, Inc.
Who Brought the Case
Marrazzo is a compliance professional with more than 35 years of experience in anti-money laundering, fraud prevention, and regulatory oversight, and has previously worked at Citigroup, GE Capital, the Depository Trust & Clearing Corporation, and First Niagara. He holds a Certified Fraud Examiner designation.2Institute of International Bankers. Ross Marrazzo Bio He joined New York Community Bancorp, later renamed Flagstar Financial, in 2022 as enterprise chief compliance officer, and was terminated effective September 13, 2024.3Banking Dive. Ex-Flagstar CEO Alessandro DiNello Accused of Illegal Conduct
The Tipping-Off Allegation
The complaint says Flagstar’s AML monitoring systems flagged a longtime client in February 2024 for at least three instances of “structuring,” the practice of splitting deposits into smaller amounts to avoid federal reporting thresholds. When Marrazzo moved to close the account, DiNello allegedly pushed back and told him to contact the client about the flagged transactions. Marrazzo refused, telling DiNello that tipping off a client about a suspicious activity investigation violates the Bank Secrecy Act.4Wigdor LLP. Marrazzo v. Flagstar Financial, Inc. Complaint
According to the lawsuit, DiNello later admitted in a private meeting that he had called the client himself. He defended the call by saying the client had a “gambling problem” and “wouldn’t have done it again” if the account stayed open. When Marrazzo said he intended to close the account regardless, DiNello allegedly told him, “I would fire you if you did.”4Wigdor LLP. Marrazzo v. Flagstar Financial, Inc. Complaint
The $5 Million Transfer
In the summer of 2024, Marrazzo opened a separate investigation into DiNello’s own finances. The complaint describes a $5 million transfer from DiNello’s personal Flagstar account to a limited liability company controlled by a person DiNello called a “wealthy old friend.” DiNello later received $1.7 million back, but that money came from the friend’s personal account rather than the LLC that had received the original funds. In a June 2024 interview with compliance staff, DiNello characterized the transaction as a personal loan and provided no documentation.5New York Post. Ex-Bank CEO Tipped Off Client on Money Laundering Probe6The Real Deal. Ex-Flagstar CEO Accused of Permitting Money Laundering
Marrazzo alleges the mismatch between the LLC that received the money and the personal account that returned part of it, combined with the absence of paperwork, raised red flags for potential violations of NYSE and SEC rules concerning money laundering or insider trading. The complaint notes that the transfers happened around the same time as a $1.05 billion capital raise led by Liberty Strategic Capital, the firm run by former Treasury Secretary Steven Mnuchin, during which certain members of management were offered the chance to invest at $2.00 per share.3Banking Dive. Ex-Flagstar CEO Alessandro DiNello Accused of Illegal Conduct7Flagstar Financial IR. NYCB Announces Over $1 Billion Equity Investment
The Retaliation Claim and What Marrazzo Is Seeking
Marrazzo alleges he was fired on September 13, 2024, to stop him from reporting his findings on DiNello to government authorities. The suit brings claims under the whistleblower protections of the Sarbanes-Oxley Act, arguing that his termination was direct retaliation for protected compliance activity.8GovInfo. Marrazzo v. Flagstar Financial, Case No. 25-cv-04183
The complaint also includes a breach of contract claim for $333,333 in severance that Marrazzo says he was owed under a 36-month employment agreement signed in June 2022, along with a New York Labor Law claim for nonpayment of those contractual wages. He is seeking reinstatement, back pay and bonuses, compensatory damages for emotional and physical distress, and a court order barring the defendants from sharing disparaging information about him with future employers.4Wigdor LLP. Marrazzo v. Flagstar Financial, Inc. Complaint He is represented by Wigdor LLP.9Wigdor LLP. The Firm
Flagstar’s Response and Current Status
Flagstar and DiNello have denied the allegations. In March 2026, the defendants moved to dismiss for failure to state a claim. Their attorneys argued that Marrazzo was “lawfully terminated” and that his complaint tries to “cobble together three disparate incidents,” a disagreement over a customer account, a human resources concern, and an investigation into NYSE rule compliance, none of which “individually or collectively, sustains a retaliation claim.”10American Banker. Former Flagstar Chairman to Step Down From Board of Directors
Marrazzo’s attorneys called the motion a “transparent attempt to evade responsibility for the conduct alleged in the complaint.” As of the most recent docket activity in May 2026, the motion remains pending before District Judge Joan M. Azrack, with no ruling issued.1CourtListener. Marrazzo v. Flagstar Financial, Inc.11PACER Monitor. Marrazzo v. Flagstar Financial, Inc. et al Magistrate Judge James M. Wicks granted the defendants’ motion to stay all discovery in September 2025 while the dismissal motion was briefed.8GovInfo. Marrazzo v. Flagstar Financial, Case No. 25-cv-04183 Marrazzo filed an amended complaint in October 2025.
DiNello’s Exit From the Board
DiNello was president and CEO of the company only briefly in early 2024 before Joseph Otting, a former U.S. Comptroller of the Currency, was appointed CEO effective April 1, 2024. DiNello then held a non-executive chairman role and later moved to a board seat and senior advisory position.12Flagstar Financial IR. NYCB Otting Appointed Chairman
In March 2026, roughly seven months after the lawsuit was filed, Flagstar disclosed that DiNello would not stand for re-election to the board. His term is set to expire at the company’s annual meeting on June 9, 2026. DiNello said in a statement that he was “enjoying retirement and exiting all my board positions as my terms expire,” and added, “I prefer to leave on my terms and before others think I should be leaving.” The company said his departure did not stem from any disagreement with Flagstar.13Banking Dive. Flagstar DiNello to Step Down From Board