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By Allan Dowd
VANCOUVER (Reuters) - Worried U.S. investors have flooded police with phone calls after a raid on Canadian Internet gambling provider Starnet Communications International Inc. (OTC BB:SNMM - news) , authorities said Monday.
Canadian police said charges were pending in their 18-month probe of illegal gambling and pornography. The company has denied wrong-doing and blamed the entire investigation on ``a misunderstanding of Internet issues.''
Investigators removed files and equipment from Starnet's Vancouver headquarters over the weekend following a raid Friday on the headquarters and the homes of six company managers.
News of the raid caused the market value of the company to drop more than $300 million Friday, although its shares -- traded on the over-the-counter market in the United States --rebounded slightly Monday to close up 1-17/32 at 5-19/32.
``We took over 100 calls here (Friday afternoon) from investors, almost exclusively American investors, who were just frantic, and that pace has continued this morning,'' Vancouver Police spokeswoman Anne Drennan said.
``It's just been one call after another,'' Drennan told Reuters.
The Vancouver company, created in 1997 out of the remains of an ice-cream marketing firm, operates adult entertainment Web sites and sells software and support services for Internet gambling sites across North America.
Starnet's gambling clients obtain their licenses from the government of the Caribbean island nation of Antigua. Authorities in Antigua are working with Canada on the investigation, Drennan said. The warrant explaining the reasons for Friday's raids by a coordinated task force of the Royal Canadian Mounted Police and Vancouver Police remained sealed by court order Monday.
The company said that it was back in operation Monday when police allowed employees to return to the offices. It added that it would ``continue its operations and proceed with its strategic plans.''
``We believe the selective investigation into the operations of our company is a result of misunderstanding of Internet issues as they relate to the process of our business and the venues in which our services are offered,'' Mark Dohlen, Starnet's chief executive, said Monday in a written statement.
The company also said Monday that it is selling its pornography sites. The sites had provided Starnet with its early revenue.
Shares of Starnet were trading at less than 50 cents last year but they climbed as high as $29 per share in July 1999, before sliding slightly over a reports of a lawsuit from an angry gambling client.
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