The Dallas Observer is part of Village Voice Media (http://www.villagevoicemedia.com), which includes similar local weekly newspapers in other cities. They aren't exactly incompetent rabble-rousers, but they tend to do more investigative journalism and "what-if" scenarios than your average major daily newspaper. I doubt they have any real direct experience with this particular corner of the IT industry, though, because it's incredibly unlikely that pirated movies prompted the takedown.

I've worked at various hosting companies around Dallas for 5 years, and have worked or observed quite a few abuse cases involving the federal government. This sort of heavy-handed action (killing an entire company's operations for a single client) has NEVER happened in my experience, and definitely not for something as innocuous as copyright infringement. That's what the DMCA is for. The feds don't get involved unless it's some seriously nasty stuff going on, like child porn, suspected terrorist communication, fraud, malware distribution, etc.

In the event that the government gets involved, they will have a field agent demand access to individual systems under a subpoena, but only to the systems actually involved (maybe some switches/routers as well). Unless Core IP has been proven to be complicit in some kind of ultra-illegal activity, e.g. the CTO is the kingpin of some hardcore piracy network, I have a hard time believing that this has anything to do with a leaked movie. I'd think that the Secret Service (US Treasury) would be involved in such a case, rather than the FBI.

This really is completely ridiculous, though. Makes you want to go read the common carrier laws cover-to-cover :)

edit: I guess this piracy thing has been confirmed as a rumor for some time... but hopefully this sheds some light about how the process works :)

Are you being sarcastic?

edit: I mean, there have to literally be hundreds of other possible explanations.