Federal agents Thursday searched the St. Paul office of embattled developer Jerry Trooien looking for evidence of a fraud scheme.

FBI special agent and spokesman Steve Warfield in Minneapolis confirmed the search, which started Thursday morning and involves the Internal Revenue Service. He would only say that it "concerns an alleged fraud scheme" and that they were "looking for evidence."

Authorities searched the offices at 10 River Park Plaza, Suite 800 in St. Paul, the headquarters of Trooien's JLT Group Inc. They were "mostly looking for documents and electronic documentation," Warfield said. He declined to give the nature of the alleged fraud.

Neither Trooien nor his bankruptcy lawyers could be reached for comment.

The search is the latest twist in the unwinding of the well-known, outspoken developer, who, despite his myriad business interests, including aircraft-leasing companies, will probably always be remembered for the Bridges of St. Paul -- a larger-than-life $1.5 billion riverfront complex that never materialized.

Trooien, 63, filed for Chapter 11 bankruptcy in October, reporting liabilities of $284.5 million and assets of just $6.5 million.

He was the latest of Minnesota's business moguls to crash, following auto king Denny Hecker and Tom Petters, whose retail operation turned out to be an elaborate Ponzi scheme.

According to bankruptcy documents, Trooien owns or had interest in more than 100 business entities.

He owes millions of dollars in unpaid property taxes on many of this properties.

GE Capital Corp. had been pursuing Trooien before the developer sought bankruptcy protection for defaulting on more than $17 million in aircraft loans.

Before the bankruptcy, GE Capital got a court order letting it place liens against Trooien's stakes in more than two dozen business entities.

The two have continued to wrestle in bankruptcy court, where GE Capital has tried to get the bankruptcy dismissed or converted to a Chapter 7 liquidation.

'Breathtaking scale'

Trooien "has no likelihood of rehabilitation," GE Capital's attorneys said in court documents filed Wednesday. "Meanwhile, the estate incurs administrative expenses of breathtaking scale with no end in sight."

They called one of the two plans Trooien has proposed for reorganizing and paying back creditors "the financial equivalent of placing all the estate's liquid assets on nineteen black and giving the roulette wheel a spin."

Lawyers following Trooien's bankruptcy said they were surprised by the fraud search and didn't know what it was about.

People familiar with Trooien's business empire, including a former colleague, said it has been snarled in legal disputes for some time and there were several aspects of his operations that could be the target of the investigation, although the dealings around his aircraft business seem to be a leading candidate.

Actions last spring

Last spring, the state Commerce Department disciplined two real estate professionals for fraud related to sales of units at Cloud 9 Sky Flats, a Minnetonka condominium building that Trooien's JLT Group developed. One of the people, Sheri L. Delich, was permanently barred from mortgage originating or servicing and fined $100,000 for distributing kickbacks to people involved in the sales of units in 2007 and 2008, according to a consent agreement signed May 14, 2010.

Delich could not be reached for comment.

In a Star Tribune story detailing his mounting business troubles in August 2009, Trooien said in a statement that his business is "having ongoing discussions with its lenders and expects to resolve all issues satisfactorily in the near future."

Recently the trustee in his bankruptcy court recommended liquidating Trooien's assets.

Jennifer Bjorhus • 612-673-4683