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Sandmannd

Feds raid Petters headquarters in Minnetonka

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Federal investigators are searching the Minnetonka headquarters of Petters Group Worldwide, which owns Sun Country Airlines and has substantial holdings in many other businesses.

The purpose of the search has not been made public.

The search in the 4400 block of Baker Road began about 9 a.m. and will continue for the rest of the day, said FBI spokesman Paul McCabe. No arrests have been made, McCabe said.

The FBI, the U.S. attorney's office, the IRS criminal investigative division and the U.S. Postal Inspection Service are participating in the search, he said.

Employees inside were excused for the rest of the work day and won't be allowed back inside until the search is concluded, McCabe said.

Tom Petters, chief executive officer of Petters Group Worldwide, was not at the Minnetonka headquarters when the search warrant was executed, said Petters spokewoman Andrea Miller.

She declined to say where Petters is today.

"We don't have any comment on the investigation. We are in conversation with [officials] to learn more about it."

However, Miller added, "We do believe that this is related just within Petters Group [the parent company] and that it does not affect Sun Country Airlines, Polaroid or Fingerhut."

About 160 employees work at the Petters headquarters, and Miller said that all were asked to leave the building while it was searched.

At midday today, the main entrance was blocked by a Minnetonka police car, and a delivery person was turned away. About two dozen vehicles, all connected to law enforcement were in the parking lot.

Petters owns all of the voting shares of Mendota Heights-based Sun Country. The low-fare carrier has struggled financially and the airline's management has approached the Metropolitan Airports Commission for financial assistance. Although Sun Country has not made a specific request to the MAC, in June Sun Country CEO Stan Gadek said the carrier might need $50 million in some form of public assistance.

A search was not conducted at Sun Country headquarters today, said airline spokeswoman Wendy Blackshaw. She added that Sun Country's flight schedule is operating normally today and that the airline's executives have not been interviewed by federal investigators.

In recent weeks, Sun Country has been marketing itself as the "hometown" carrier and emphasizing that its executives live in the Twin Cities.

Sun Country had a net loss of $47 million on operating revenue of $251 million in the four quarters that ended in June.

Petters is chairman of the Sun Country board of directors. In April, Jay Salmen, vice chairman of the Sun Country board, said in an interview that Petters had "deep pockets" and that Petters and his Petters Group Worldwide were "firmly committed to financially support" Sun Country as it adapts to higher fuel costs.

In July, Petters got into the magazine business and bought assets of Bloomington-based Metropolitan Media Group for undisclosed terms.

Petters publishes MinnesotaBusiness and the in-flight magazine at Sun Country. But most of its magazines are focused on particular communities, such as Eden Prairie Magazine and Edina Magazine. City South Magazine covers entertainment and lifestyle features in south Minneapolis.

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