Ex-Flagstar CEO Accused of Blocking Money Laundering Probe, Firing Whistleblower

The plaintiff, Ross Marrazzo, alleges he was terminated while actively investigating a $5 million transfer involving DiNello, who received $1.7 million back from a millionaire’s personal account. Marrazzo contends the transactions raised red flags under NYSE and SEC rules. He also claims DiNello obstructed closure of flagged accounts and made inappropriate disclosures during internal meetings.

Marrazzo’s lawsuit also outlines troubling workplace behavior by DiNello, including an incident where he allegedly took a confidential legal call with a junior employee visibly seated on his lap. Despite Marrazzo reporting the conduct to the audit committee, no disciplinary action was taken.

The case raises major concerns about oversight at Flagstar, a key lender in NYC’s rent-stabilized multifamily sector. Attorneys are pursuing a jury trial under whistleblower protections provided by the Sarbanes-Oxley Act.