According to Anderson, he began working with the MPAA in 2005 after a failed business venture with TorrentSpy founder Justin Bunnell. He offered to set up an anti-piracy marketing campaign for the MPAA, and received $15,000 from them in exchange of information about TorrentSpy, which included everything from bank records to passwords and the source code for the site.
The information provided by Anderson was eventually used to bring a copyright infringement suit against TorrentSpy, who in turn sued the MPAA under the federal Wiretap Act. The MPAA does not dispute it paid Anderson for the sensitive information, but claims that the information obtained from third-parties is only taken into consideration if it was collected by legal means – though clearly that was not the case here. You can read the complete story over at Wired.