A former chief compliance officer with Flagstar Financial alleges he was fired for investigating money laundering and reporting compliance violations involving the bank’s former CEO who served in the post for less than two months, according to a federal lawsuit filed last week.
Ross Marrazzo, enterprise chief compliance officer at New York Community Bancorp (NYCB), filed the complaint July 29 in the U.S. District Court for the Eastern District of New York against Flagstar and its former CEO Alessandro DiNello.
Hicksville, New York-based Flagstar acquired NYCB in 2022, which later adopted the Flagstar name, according to court records.
DiNello served as Flagstar Financial’s CEO for less than two months from February to April 2024. Prior to the merger, though, he served as president, CEO and a director with Flagstar Bank and Flagstar Bancorp, and had been with the company for more than 40 years, according to his LinkedIn profile. DiNello still sits on Flagstar Financial’s board of directors, according to the company’s investor relations website.
The lawsuit alleges that Marrazzo, a regulatory compliance expert with more than 40 years of experience, was terminated in September 2024 while investigating DiNello’s suspicious financial transactions. Marrazzo believed the transactions potentially violated federal laws around money laundering and insider trading, the lawsuit claims.
The issues began in February 2024 when the bank’s anti-money laundering monitoring program flagged a client for structuring deposits, which is illegal, court records show. Marrazzo’s investigation found “at least three instances of structuring on the client’s account, confirming the irregularity,” the lawsuit notes.
When Marrazzo asked DiNello about closing the account per federal regulations, DiNello allegedly urged him to tip off the client of the probe—essentially encouraging him to violate federal law, court documents show.
During a later meeting, DiNello allegedly threatened Marrazzo’s employment if he kept digging. According to the lawsuit, when Marrazzo said “I would do it again,” regarding closing the account to comply with the law,” DiNello responded, “I would fire you if you did.”
The lawsuit details Marrazzo’s investigation into DiNello’s personal banking activities. Around the time Liberty Capital acquired controlling interest in NYCB, DiNello allegedly “made a $5 million transfer to a millionaire” and “subsequently received a $1.7 million transfer back.”
When interviewed by Marrazzo and the financial crimes compliance officer in June 2024, DiNello claimed he had “simply ‘lent’ the money to an ‘old friend'” with no documentation, according to the complaint.
However, the transaction raised concerns because “the $5 million actually went into an LLC’s bank account” while DiNello “received $1.7 million back from his friend’s personal account,” court records show. This indicates potential money laundering or insider trading violations, the lawsuit claims.
The complaint also alleges a separate incident where DiNello participated in a video call with a law firm where he discussed material, non-public company information—all while a junior employee visibly sat on his lap and rubbed his head, court documents show.
Someone on the call later alerted Marrazzo of the incident. Concerned by the ethical and regulatory conflicts—an inappropriate workplace relationship and discussing sensitive, non-public company information in front of a junior employee—Marrazzo reported it to the chair of the bank’s audit committee. After an outside law firm investigated, the company opted not to discipline DiNello, calling the incident a “misdemeanor,” the lawsuit claims.
Beyond the whistleblower allegations, Marrazzo claims Flagstar breached his employment contract by failing to pay severance when they fired him. Based on his $500,000 salary and 36 weeks remaining on his contract before his termination in September 2024, Marrazzo claims he’s owed $333,333 in severance.
Additionally, Marrazzo is seeking reinstatement, back pay (including bonuses and benefits), compensatory damages for emotional distress and lost reputation, and attorneys’ fees, court documents show. He’s also requesting an order prohibiting Flagstar and DiNello from disclosing disparaging information to prospective employers.
Michael J. Willemin, Marrazzo’s lawyer with Wigdor Law, a New York City-based employment litigation law firm, told RISMedia on Monday, “Whistleblowers play an important role in the financial industry. When banks and bankers engage in shady behavior, financial industry consumers pay the price.”
He continued: “Whistleblowers prevent those issues from ballooning into crises and step in to prevent illegal activity. Marrazzo should have been congratulated for his efforts to report wrongdoing, not fired, and the fact that Flagstar and DiNello are willing to brazenly get rid of whistleblowers should make customers consider what else Flagstar might be trying to hide.”
In November 2024, Mr. Cooper acquired Flagstar Bank’s mortgage operations for approximately $1.3 billion in cash. Flagstar reported a net loss of $70 million in the second quarter of 2025, a 78% improvement from the $323 million loss the same period a year ago, driven mostly by commercial and multifamily real estate lending, according to its latest earnings release.
Flagstar did not respond to RISMedia’s request for comment about the lawsuit as of press time.
