  We present a study of the inclusive $D^{*\pm}$ production in the decay of
$\Upsilon(1S)$ using $(98.6 \pm 0.9)\times 10^6$ $\Upsilon(2S)$ mesons
collected with the BaBar detector at the $\Upsilon(2S)$ resonance. Using the
decay chain $\Upsilon(2S)\to \pi^+ \pi^- \Upsilon(1S), \Upsilon(1S) \to
D^{*\pm} X$, where X is unobserved, we measure the branching fraction
$\BR[\Upsilon(1S)\to D^{*\pm} X] = (2.52 \pm 0.13({\rm stat}) \pm 0.15({\rm
syst}))%$ and the $D^{*\pm}$ momentum distribution in the rest frame of the
$\Upsilon(1S)$. We find evidence for an excess of $D^{*\pm}$ production over
the expected rate from the virtual photon annihilation process
$\Upsilon(1S)\to\gamma^*\to c\bar c\to D^{*\pm} X$.
