Sean and Michelle Henderson were probed by cops after their £650,000 home was raided by officers.
Michelle was arrested at the scene, while Sean was taken into custody in London, police also raided another property he owns near the family home in the village of Tetney.
Another resident said: "This is such a quiet sleepy village. It is hard to understand what is going on."
Humberside Police later confirmed they had arrested a 49-year-old female in connection with money-laundering offences, and that a 47-year-old man had been arrested on their behalf by Metropolitan officers.
Ella - who finished sixth on last year's series of 'The X Factor' - remained seemingly unaware of the the drama unfolding with her family.
She tweeted on Monday: "Morning.. I’m back! .. And heading to the office to plan my lil surprise for u all with the label ;) Cannot wait for this!!"
The star was snapped up by Simon Cowell's record label after her 'X Factor' exit.