A new lawsuit accuses the former CEO of Flagstar Financial of a range of inappropriate or illegal activities, including divulging company secrets while a "junior employee" sat on his lap.
The plaintiff, Ross Marrazzo, filed the complaint on Tuesday against
"The Complaint alleges behavior ranging from alarming to brazenly illegal," Marrazzo's attorney, Michael Willemin, said in a
From 2022 to 2024, Marrazzo served as enterprise chief compliance officer for Flagstar, which for much of that time was still called New York Community Bancorp. In Marrazzo's final year on the job, the complaint says, he discovered that DiNello had "direct knowledge of a client's money laundering activities." When Marrazzo began to investigate, DiNello allegedly threatened to fire him.
Undeterred, Marrazzo continued to dig. In the summer of 2024, he interviewed the CEO himself about potential violations of SEC and New York Stock Exchange rules regarding money laundering and insider trading. Then, the lawsuit says, DiNello made good on his threat.
"Marrazzo was terminated in the midst of his investigation, just before he had the opportunity to conclude the investigation and potentially notify the appropriate government authorities," the complaint says.
At the time of this article's publication, DiNello and Flagstar had not responded to American Banker's requests for comment.
The lawsuit also includes another, more lurid example of DiNello's alleged misbehavior. At the beginning of 2024, the complaint says, the CEO discussed "a sensitive company transaction on a Zoom conference while a junior employee sat on his lap."
"During that meeting, material non-public information was discussed," the complaint says. "DiNello had a clearly-visible junior NYCB employee sitting on his lap and rubbing his head."
Other employees on the call flagged the incident to Marrazzo, who worried it raised two concerns: first, that an inappropriate workplace relationship may be going on, and second, that private company information was being shared with a junior employee.
But Marrazzo was not chosen to investigate these concerns. Instead, Flagstar hired an outside law firm to look into the matter, and ultimately DiNello was not disciplined.
According to Marrazzo and his lawyers, this outcome reflected a broader problem with Flagstar's corporate culture.
"This episode is indicative of the attitude of Flagstar's leadership," the complaint says. "Those at the helm of the Bank openly flout the law and defend one another when they need to do so."
According to his LinkedIn page, DiNello's career at Flagstar began in 1979. Over the years, he served as the bank's head of branch banking, retail product strategy, marketing, communications and other roles. He became CEO of the bank in February 2024, but stepped down at the start of April when he was
Marrazzo is now suing for damages, back pay and a severance payment that he says Flagstar never gave him. In a statement, his lawyers were adamant that DiNello and Flagstar should face consequences.
"Financial institutions may not be permitted to operate above the law, nor should employees be punished for trying to uphold it," Willemin said.
