UPDATE 1-U.S. criminal probe targets 7 Midwest IHOPs
* FBI, IRS, ICE agents involved in ongoing criminal probe
* IHOP parent co, franchise owner cooperating
* DineEquity shares down 3 percent
Sept 21 (Reuters) - Federal agents executed search warrants against seven IHOP restaurants owned by a single franchisee in Ohio and Indiana, a spokesman for parent company DineEquity Inc said on Wednesday.
FBI, Internal Revenue Service and U.S. Immigration and Customs Enforcement agents were involved in the searches at each of the seven restaurants on Tuesday morning, Special Agent Scott Wilson of the FBI's Cleveland division told Reuters.
Six of the targeted restaurants are located in Ohio and one is in Indiana. The restaurants have been cleared to reopen.
Local television station WTOL reported that a "well-placed source" with the Toledo Police Department said the investigation involved allegations of money laundering and potentially undocumented workers.
Wilson, of the FBI, said he could not reveal the reason for the investigation because the warrants are under seal.
Agents also searched two residences and one storage unit, said Wilson, who said he could not disclose who owns or leases those properties.
"It's an ongoing criminal investigation," said Immigration and Customs spokesman Khaalid Walls, who also declined to give additional details.
DineEquity spokesman Patrick Lenow said both the company and the franchisee, Tarek Elkafrawi, were cooperating with authorities.
Lenow said Elkafrawi and his attorney were "not offering interviews and do not have any insight into the reasons for the investigation".
Reuters was not immediately able to contact Elkafrawi or his attorney for comment.
"It is our desire to gain details on the reason for the investigation," said Lenow, who added that the company has been told that the investigation is not linked to terrorism.
U.S. immigration agents have been targeting employers rather than workers since 2009. Chipotle Mexican Grill Inc , the highest-profile target of that crackdown, is the subject of a criminal probe into its hiring practices.
Franchisees of restaurants such as McDonald's Corp , Subway and Chuy's also have been targeted.
Stricter immigration enforcement -- along with tighter post-Sept. 11 national security -- is making it harder for undocumented workers to use their real names and fake or stolen Social Security numbers to get jobs.
In March, eight Pei Wei restaurants in Arizona were temporarily closed following an employment-related identity theft investigation conducted by local authorities.
Those authorities said they arrested more than two dozen undocumented Pei Wei workers suspected of using fake identification to gain employment.
Shares of DineEquity were down 2 percent percent at $39.60 in afternoon trading.
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