The U.S. Department of Justice has targeted a group known as the Underground Network for its first criminal investigation into intellectual property piracy over peer-to-peer (P2P) networks.

Direct Connect, P2P software developed by NeoModus, enables the network.

A Justice Department official told internetnews.com that neither NeoModus nor its technology were under investigation. Last week, a U.S. Appeals Court upheld a lower court ruling that P2P software is legal even if it can be used in an illegal manner.

Instead, the probe is focusing on a specific network of Direct Connect users that requires its more than 7,000 members to make anywhere from 1 to 100 gigabytes of media available for other members.

During a media briefing Wednesday, Attorney General John Ashcroft said "virtually every kind of software, game, movie and music was available for illegal downloading and distribution on these networks, from computer games and music that would cost as much as $18 to $35 dollars if purchased legitimately, to specialized software that has a retail cost in excess of $1,000."

Ashcroft authorized search warrants Wednesday morning involving an Internet service provider and five individuals in Texas, New York and Wisconsin. Computers, software and computer-related equipment were confiscated in the raids. No charges have been filed.

According to an FBI affidavit in support of the search warrants, the Underground Network Web site is hosted on a server located in San Antonio, Texas. The hubs on the network are located both in the U.S. and abroad. The affidavit states that the network has 55 staff positions including hub operators and moderators and network administrators.

Users access the site by downloading Direct Connect software and then connecting to the Underground Network. There is no fee to join the network and members are provided with access to a list of hub sites on the network.

Through what the FBI called "online covert operations and traditional investigative techniques," authorities said they were able to identify the leadership of the network and the organizational structure of the U.S. hubs. Five of those hubs and their operators are the subject of the DOJ investigation.

After an undercover FBI agent joined the Underground Network, he was able to download 72 gigabytes of copyright protected material from the five sites. The FBI says the material consisted of approximately 84 movies, 40 software applications, 13 games and 178 sound recordings.

Since last September, the Recording Industry Association of America (RIAA) has filed copyright infringement civil suits against almost 7,000 individuals using P2P applications on the public file-sharing sites of Kazaa, Grokster, Morpheus, eDonkey and others, but Ashcroft's Wednesday announcement marks the first criminal investigation into P2P networks.

The maximum penalty for criminal copyright infringement for a first-time offender is up to five years in prison and a fine of $250,000.

"P2P does not stand for 'Permission to Pilfer.' Illegal distribution and reproduction of copyrighted material is a serious criminal offense," Ashcroft said. "Today's investigative action sends a clear message to online thievesand those who think nothing of downloading those stolen goods to their computers and MP3 players."

Ashcroft added, "You can pay the fair value for music, movies, software and games like every other consumer, or you can pay an even higher price when you are caught committing online theft."