[ferretchucker]

Well, it does sound like he's almost certainly involved in that kind of thing. He's your friend and it sounds like he does need friends, so don't go straight to the authorities. But you do have to think about yourself, as if they track it down, you'll be in deep shit too. Confront him about it, but make sure to be understanding. If the problem persists however, and you think it makes escalate from downloading this to something much worse, you have to do something serious.

Hope this helps.