SEC sues estate of Massachusetts advisor, firm over alleged $1.68M misappropriation

Federal regulators are pressing ahead with a civil case against the estate of a Massachusetts adviser and his firm, alleging a yearslong pattern of steering client money into accounts he controlled and then using the cash for personal expenses, business bills and payments to other clients.

The Securities and Exchange Commission said the adviser, John R. Brodacki III, and Castle Hill Financial Group persuaded at least 18 advisory clients to send funds directly to the firm between at least June 2018 and September 2025, often pitching the transfers as investments to benefit the clients or their relatives.

In its complaint, the SEC said many of the clients were “elderly, retired or seriously ill,” and that the alleged scheme generated more than $1.8 million in client transfers. After deducting partial repayments of about $162,750, the agency said the estimated misappropriation totals about $1.68 million.

Stopping short of calling Brodacki's actions fraudulent, the regulator's complaint described client funds being used for items that included “lavish meals,” exclusive social club dues, tuition and travel, along with transfers to family members and payments to other advisory clients. 

“Brodacki’s and Castle Hill’s actions thus have some of the hallmarks of a Ponzi scheme,” the SEC said in its complaint.

The filing also highlights how the alleged transactions sat outside the custody and billing structure clients would typically expect. According to the SEC, Brodacki operated for years as an investment adviser representative of an SEC-registered RIA, and Castle Hill functioned as one of the independent advisors through which that RIA operated.

Brodocki's IAPD record shows he was affiliated with Bay Colony Advisors from 2017 until July 2025.

The SEC said Brodocki should have kept his client's assets with a custodian, and advisory fees were to be charged quarterly as a percentage of assets under management, ranging from 0.75% to 1.25% annually.

The SEC cited language from client advisory agreements stating, “At no time will the Advisor accept, maintain possession or have custodial responsibility for the Client’s funds or securities.” The complaint further says the compliance guidelines at Brodocki's employer firm warned representatives that clients’ checks should be payable to the custodian, not to an advisor or their DBA.

By July 11, 2025, the SEC complaint said Brodacki was terminated after an internal investigation concluded he improperly received client funds directly into a Castle Hill account.

According to his IAPD record, he "allegedly accepted a financial planning fee from a client which appears to be a loan from the client to Castle Hill Financial Group," which it seems Brodacki did not inform his employer about.

The SEC alleges Brodacki continued soliciting and accepting client money afterward and maintained marketing that suggested the relationship with the RIA was still in place through December 2025.

One client, described in the complaint as a 77-year-old retired building contractor, allegedly sent two $50,000 checks after being told the funds would be placed in a separate account intended to benefit the client’s sister. The SEC says the client later received periodic “account detail reports” listing a “New England Note” investment that the agency alleges did not exist, while bank records showed the $100,000 was quickly spent down through transfers, withdrawals and expenses including rent and dining.

Brodacki died on or about March 23, the SEC said. The agency is seeking disgorgement with prejudgment interest from the estate and the firm, and is also pursuing civil penalties and a permanent injunction against the firm.