Former Flagstar CEO under allegations for illicit activities
In a shocking turn of events, Ross Marrazzo, a 40-year veteran in the regulatory compliance field, has filed a lawsuit against former Flagstar CEO Alessandro DiNello. The lawsuit, filed on July 29, 2025, alleges that DiNello was aware of and possibly involved in money laundering, insider trading, and breaches of compliance regulations.
The lawsuit claims that DiNello, who served as Flagstar CEO for a brief period from February to April 2024 during a period of financial turmoil, had direct knowledge of a client’s money laundering activities. When Marrazzo began investigating these violations in 2024, DiNello allegedly threatened to fire him and eventually had him terminated to obstruct the investigation before it could be reported to government authorities.
The lawsuit accuses DiNello of “brazenly illegal” conduct, including discussing sensitive company matters unprofessionally and attempting to block regulatory compliance investigations. As of early August 2025, the lawsuit is active in the U.S. District Court for the Eastern District of New York, and Flagstar has not publicly commented on the allegations.
One of the key incidents that led to the investigation involved deposits made by a client in February 2024. The bank's anti-money laundering system flagged these deposits as illegal "structuring," and Marrazzo closed the account. However, Marrazzo and his team raised a request with other banks to obtain more information on the bank transaction, which led to his "abrupt" termination, effective in September.
The lawsuit also alleges that DiNello made a $5 million transfer to a millionaire and received $1.7 million back, which triggered the bank's AML monitoring system. DiNello reportedly claimed he simply "lent" money to an "old friend" without documentation.
Marrazzo is seeking employment restoration along with financial compensation, including back pay with all bonuses, compensation for all monetary and economic damages, and those arising from physical and emotional distress. He is also requesting an order to stop the defendants from violating whistleblower provisions and to prevent the defendants from sharing disparaging information about Marrazzo to potential employers and protection from interference with his future employment applications.
In addition to the financial allegations, the lawsuit also raises concerns about DiNello's professional conduct. During a video meeting with law firm Skadden Arps, DiNello had a junior NYCB employee sitting on his lap and rubbing his head, potentially breaching professional conduct.
The lawsuit comes at a time when Flagstar is under scrutiny. In March 2023, NYCB bought a large segment of the failed Signature Bank for nearly $2.7 billion. The current status of the lawsuit and its potential impact on Flagstar remain to be seen.
- The lawsuit against Alessandro DiNello, the former Flagstar CEO, extends beyond financial allegations and includes charges of breaching professional conduct during a video meeting with law firm Skadden Arps.
- Ross Marrazzo, the plaintiff in the lawsuit, is not only seeking financial compensation, including back pay and bonuses, but also employment restoration and an order to stop the defendants from violating whistleblower provisions.
- The various allegations against DiNello, such as money laundering, insider trading, and breaches of compliance regulations, could potentially harm Flagstar's reputation, particularly at a time when the bank is under scrutiny following NYCB's purchase of a large segment of the failed Signature Bank in March 2023.
