Executive of Hicksville-based bank accused of money laundering in federal lawsuit

The former executive of a Long Island-based bank has filed a federal lawsuit alleging he was wrongfully terminated for investigating a board director's potentially questionable financial dealings. 

The executive, Ross Marrazzo, who was enterprise chief compliance officer at New York Community Bancorp Inc. in 2022-24, said he was fired after challenging the conduct of Alessandro “Sandro” DiNello.

DiNello has served on the bank's board for three years and was CEO and president for six weeks in 2024 while a permanent leader was recruited, based on securities filings. 

Marrazzo lost his job in September as he and another unidentified NYCB compliance officer were in the process of investigating multimillion-dollar transactions by DiNello and a millionaire, according to the suit, which was filed on July 29 in federal court in Central Islip.

Last year, DiNello deposited $5 million into one of the bank accounts of the unidentified millionaire and received repayment of $1.7 million from a different account. There was no paperwork backing up either transaction, the suit states.

The money transfers "set off several alarm bells [with the compliance officers] ... that DiNello could be using the transfer to launder money or to conduct insider trading and obfuscate the origin of his investments," according to the suit. 

Marrazzo also has accused DiNello of interfering in a probe of alleged money laundering by a longtime bank customer and conducting a business meeting while a "junior" bank employee sat on his lap and rubbed his head, both in 2024. 

The latter accusation was reported to Marrazzo by an unnamed executive who participated in the Zoom meeting. During the call, DiNello discussed a proposed company transaction, the suit states.

Marrazzo reported the incident to an NYCB board committee, saying the junior employee wasn't supposed to hear the confidential information and they and DiNello appeared to be engaged in an inappropriate relationship. 

An independent law firm hired by NYCB reviewed the complaint about DiNello's conduct during the Zoom meeting and found no punishment was warranted. Marrazzo also said he was told by the law firm that DiNello "would have sued ... and it would be a mess if he was terminated," according to the suit.

"This episode is indicative of the attitude of [the bank's] leadership," the suit states. "Those at the helm of the bank openly flout the law and defend one another when they need to do so."

DiNello joined the NYCB board in 2022 when the Hicksville-based bank purchased Flagstar Bank in Michigan, where he had worked for more than 40 years. NYCB has since changed its name to Flagstar Financial Inc.

DiNello and Flagstar are defendants in the suit. Neither responded to requests for comment. On Wednesday, no attorney was listed on the court docket as representing DiNello. Lawyers for Flagstar didn’t immediately respond.

Marrazzo, 67, declined to comment through his attorney. Records show Marrazzo has moved from Island Park to Pleasant, South Carolina. 

Marrazzo’s Manhattan-based lawyer, Michael J. Willemin, declined to identify the junior employee and the millionaire with whom DiNello transferred money.

“When banks and bankers engage in shady behavior, financial industry consumers pay the price,” the lawyer told Newsday. 

Marrazzo is seeking reinstatement and claims that he is owed severance of $333,333 based on his NYCB salary of $500,000 per year. Marrazzo also is seeking back pay, including bonuses, and other damages, his lawyer said.

NYCB shareholders have credited DiNello with helping the bank avert collapse in spring 2024. NYCB's shares had plummeted on news of unexpected losses tied to its purchase of Flagstar and some assets of the insolvent Signature Bank.

A $1.1 billion bailout by former Treasury Secretary Steven Mnuchin and others on March 6, 2024, prevented a federal takeover of NYCB. Weeks later, Joseph Otting succeeded DiNello as CEO.

Since then, Otting has been implementing a turnaround plan under the Flagstar moniker. He is a former U.S. comptroller of the currency, which regulates banks.

Flagstar was the 33rd largest bank in the country based on assets of $92.2 billion as of June 30. Flagstar has about 360 branches in the metropolitan area, Michigan, Florida and on the West Coast, according to securities filings.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.