10/09/2007 11:00PM

U.S. agents search Youbet offices

EmailU.S. Immigration and Customs Enforcement agents served a search warrant at the Woodland Hills, Calif., office of Youbet.com on Oct. 4, Youbet said in a filing with the Securities and Exchange Commission late on Tuesday.

In the filing, Youbet said that it was cooperating with the investigation and that the probe has not targeted the company. The search entailed "various records including, among other things, business records of our IRG business related to the wagering activities of certain customers," Youbet said.

IRG is an offshore rebate shop located in Curacao that Youbet purchased in 2005 for $3 million in cash and future considerations of up to $9.7 million.

Prior to Youbet's acquisition, IRG had came under scrutiny in 2004 when federal investigators indicted 17 people for running an illegal gambling operation though several rebate shops, including IRG, which was never charged with a crime.

Youbet officials declined to comment beyond a statement the company released on Tuesday night.

"It is important to note that federal authorities indicated that no Youbet.com employees or subsidiaries are the focus of this inquiry," the statement said. "Further, Youbet.com has not been accused of any wrongdoing whatsoever."

Youbet's stock closed at a new one-year low, $1.48, on Wednesday, down 52 cents, or 26 percent.