Very concerning if true, though unless this is regarding the mod OP mentioned, this is not the exact issue at hand.
In my opinion, the mod structure established by Reddit and perpetuated by Lemmy is extremely flawed and will inevitably lead to abuses like this. This is the predictable result of all governance structures that lack democratic oversight. Exactly what the best oversight would look like I do not know but I hope there will be experimentation in this vein in the future. Until such time, I doubt this issue will be resolved very successfully.