The Securities and Exchange Commission is suing the estate of a former investment advisor for defrauding his clients — who were elderly, retired or seriously ill — out of $1.68 million.
The SEC's lawsuit contends that before his death on or about March 23, John R. Brodacki, III, and his company, Castle Hill Financial Group, breached their fiduciary duties "by engaging in a fraudulent scheme, using deceptive devices, and making and using false and misleading statements to misappropriate and misuse money from certain of their advisory clients."
The suit was filed last week in the U.S. District Court for the District of Massachusetts.
Between at least June 2018 and September 2025, "Brodacki and Castle Hill promised to invest over $1.845 million on behalf of at least 18 of their advisory clients," the lawsuit states.
"Over this same period, Brodacki and Castle Hill returned only $162,750 to those investors, and most of those repayments were made using other advisory clients' funds that were entrusted to Brodacki and Castle Hill to invest on their own behalf, which is behavior typical of a Ponzi scheme," the suit adds.
Brodacki told the clients that "their funds would be used to make investments for their benefit and/or the benefit of their relatives," the lawsuit states.
However, "Brodacki and Castle Hill misappropriated those funds, using them to pay Brodacki's own personal and business expenses, to make repayments to other advisory clients, and to make payments to Brodacki's own family members," according to the SEC.
Those personal expenses included lavish meals, membership fees to exclusive social clubs, travel and tuition for Brodacki's family members.
'Fabricated' Account Statements
To further the scheme, the suit maintains, "Brodacki and Castle Hill provided some of these advisory clients with fabricated account statements showing the purported value of the investments they claim to have made for these clients."
Brodacki, age 49 at the time of his death, resided in Longmeadow, Massachusetts, according to the suit.
Brodacki's BrokerCheck profile shows that he worked for IDS Life Insurance and American Express Advisors from January 2002 to March 2005. He was then employed at Equity Services in Longmeadow from April 2005 to May 2017.
From December 2017 through July 2025, Brodacki and Castle Hill were not directly registered with the SEC as advisors. Instead, Brodacki was an investment adviser rep of Bay Colony Advisors, and Castle Hill was one of the independent financial advisors through which the registered advisor operated.
During the period that Brodacki and Castle Hill did business through Bay Colony Advisory Group, they acted as investment advisors to about 110 advisory clients and had about $24.5 million in assets under management.
More Lawsuit Details
Under the advisory agreements, clients maintained accounts with a large brokerage firm that served as the custodian for their assets. All of their investment assets were to be invested through their account at the custodian, where they would be managed by Brodacki and Castle Hill as their investment advisors, the suit explains.
In exchange for those advisory services, the advisory agreements required each client to pay quarterly fees based on the total amount of their assets under management at the custodian, the suit continues, with fees ranging from .75% to 1.25% annually.
On July 25, 2025, the suit continues, the registered advisor, Bay Colony Advisors, terminated Brodacki's employment after an investigation found that Brodacki improperly received funds from one client directly into a Castle Hill account.
As his BrokerCheck profile states, "Brodacki allegedly accepted a financial planning fee from a client which appears to be a loan from the client to Castle Hill Financial Group LLC, an entity believed to be owned or controlled by Mr. Brodacki, without notice to or approval from Bay Colony Advisors."
Even after Bay Colony terminated its relationships with Brodacki and Castle Hill, "Brodacki and Castle Hill continued to solicit and accept client funds for his purported investment advisory services," fraudulently inducing at least 18 clients to make purported "investments" outside of their custodian brokerage accounts, the suit states.
Brodacki also continued to advertise his and Castle Hill's investment advisory services via Castle Hill's website and claimed that it still had a relationship with Bay Colony.
This conduct continued until December. Castle Hill was involuntarily dissolved by the Commonwealth of Massachusetts as of Dec. 31, 2025.
Some of the advisory clients sought and obtained partial repayments of the money they sent to Castle Hill, the suit continues.
After deducting those partial repayments of about $162,750, the SEC estimates that Brodacki and Castle Hill misappropriated about $1.68 million from the advisory clients they targeted in their scheme.
The agency is seeking from both the Brodacki estate and Castle Hill disgorgement of those ill-gotten gains.
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