Osaimayu, who was attached to the Lagos State Task Force on Environmental and Special Offences (Enforcement) Unit, Alausa, was arrested on Monday, June 13, by the X-Squad of the Lagos state police command.
It was gathered that the X-Squad operatives had arrested a hoodlum in the area and found the cash on him.
The hoodlum, however, fingered the police sergeant, who was posted to the area, as his accomplice.
Fatai Owoseni, the state commissioner of police, who confirmed the dismissal on Wednesday, said four other officers were dismissed for extortion and improper dressing.
The four officers were identified as Samuel Ando, Michael Adeoya, Richard Ugwu and Sulaiman Muhammed.
It was learnt that Adeoya was dismissed for allegedly wearing flip-flops while on duty, while Muhammed was dismissed for allegedly not wearing police uniform while on duty.