02/25/2009 12:00AM

Two charged with felonies in IRG probe

Email

A U.S. district attorney in Nevada has charged two people with three felony counts of running an illegal gambling business, money laundering, and interfering with the administration of IRS laws in an investigation linked to the defunct offshore rebate shop International Racing Group, according to a document filed Feb. 18 in U.S. District Court.

The document, which is called a criminal information, charges Jeffrey and Michael Jelinsky, two brothers, with the three felony counts. The document did not provide details about the gambling business other than to say that it involved "sports betting."

The U.S. attorney who filed the criminal information complaint, Gregory Bower, did not return a phone call Tuesday. District attorneys frequently file criminal information documents in investigations that involve the forfeiture of assets.

As part of the investigation, authorities for the district attorney's office seized millions of dollars from the Jelinskys and their alleged associates, including $1.3 million held in an account at International Racing Group under the name "It's All Good Buddy Inc," according to the document. Two other accounts at IRG with $92,000 and $40,000 on deposit were also seized, along with hundreds of thousands of dollars from other bank accounts.

IRG was shuttered by its parent company, Youbet.com, early in 2008 after the company said that wagering at the shop had dropped off precipitously. Youbet had acknowledged four months earlier that authorities in Nevada were conducting an investigation of several of IRG's customers and had seized several accounts. Neither IRG nor Youbet.com has been charged with a crime, and the criminal information does not contain a reference to either company other than in a list of the sources of the seized assets.

Youbet purchased IRG in 2005 for $2 million in cash and a block of shares, in the hopes of capitalizing on a business that had attracted high-rolling players using computerized wagering systems. IRG, like most rebate shops, awarded the bettors significant rebates, and those rebates averaged 12 percent of handle through the shop in 2004, according to the company's financial documents.

Just prior to Youbet purchasing IRG, the rebate shop had been named in an indictment alleging that members of an organized crime family had used the shop to make bets on behalf of customers who did not have accounts at the company. The ringleaders of the scheme were eventually convicted. IRG was not charged in that indictment either.

Youbet's chief executive officer, Michael Brodsky, did not return a phone call Tuesday.