The Oregon Department of Consumer and Business Services completed an investigation involving 10 investment brokers — including two Bay Area insurance agents — who collected more than $5 million from residents, many of them elderly.

A state cease and desist order, signed February 2008, lists three North Bend residents among those fined because of their involvement in a fraudulent time-share investment program.

The department sent out a press release this month, alerting media about the scam. The order states brokers sold unregistered securities using numerous fraudulent misrepresentations. The securities involved sales of time shares on the Yucatan Peninsula in Mexico.

Agents heavily emphasized the high returns offered by Yucatan Resorts, with investors earning as much as 11 percent a year over a 25-year period, but did not warn investors of any potential risks involved.

The reality of it was there were few properties and no rental income, the press release said. Funds obtained from the timeshare purchases were used to pay already-established investors “until the entire scheme collapsed under its own weight,” the press release said.

The complicated plot was spearheaded by Michael E. Kelly of Indiana and Ruttenberg and Associates Financial Marketing, based in Illinois. They recruited agents to sell unregistered securities, raising more than $428 million from investors nationwide.

Among those recruited were:

• Bill Boedeker — last known address is in North Bend, who was the managing general agent for the Yucatan Resorts universal lease investment program. He sold investments to 12 residents, raising $290,740 and earning a 15 percent commission.

• Roger Stewart — owner of an insurance business in North Bend, who sold investment to 11 residents, raising $441,688 and earning a 13 percent commission.

• Doug Laird — who also owns a North Bend insurance business and sold investments to 17 residents, raising $831,175 with a 13 percent commission.

None were licensed to sell securities in the state.

The Oregon Insurance Division is investigating whether any insurance code violations occurred. Laird and Stewart are among eight insurance agents involved.

In these matters, service agents (insurance, mortgage and the like) typically offer investment deals to existing clients because a relationship of trust has already been established, explained Kevin Anselm, chief of enforcement and securities with the state Division of Finance and Corporate Securities.

None of the sales agents was prosecuted as a criminal, Anselm said. Due to the shear size of the operation, only the kingpins — Kelly and Ruttenburg and Associates — faced federal prosecution.

The state couldn’t press criminal charges because each broker’s case falls under county jurisdiction, but it did levy fines.

In total, the 10 sales agents were fined more than $700,000.

“We wanted them know that what (they) did was wrong and they can’t do it again in the state of Oregon,” Anselm said.

Stewart said he voluntarily paid his without going to court, because he was eager to put the matter behind him.

Stewart maintains that he had no idea that the time share program was bogus and is actively engaged in efforts to recoup his clients’ funds.

He said he got caught up in the program in 2002 after an attorney representing Resort Holding International, the corporation that owned the Yucatan time share, assured him everything was on the up and up.

He said he also invested in the deal.

“I am a victim,” he said. “I personally have a sizable chunk in there myself.”

Anselm said the brokers should have done their homework before initiating public buy-ins.

“They have a duty to find out what it is they are selling,” she said.

The state advises consumers to do same. To check on an individual’s credentials and licensing history, call the toll-free at (866) 814-9710, or visit http://www.dfcs.oregon.gov.

On the Web: See the state’s cease and desist order at http://www.cbs.state.or.us/dfcs/securities/enf/orders/S-07-0043-17.pdf