I did not find a link to the CNN story but the talking heads there were claiming that just having or installing a mod chip was a felony punishable by 5 years in jail and a $500,000 fine, presumably due to the claim that these activities violate the DMCA, as stated on ICE's site. The best news of all is that there is more to come. ICE says this is part of an expanding program of IP enforcement. As they say:
"Illicit devices like the ones targeted today are created with one purpose in mind, subverting copyright protections," said Julie L. Myers, Assistant Secretary of Homeland Security for Immigration and Customs Enforcement. "These crimes cost legitimate businesses billions of dollars annually and facilitate multiple other layers of criminality, such as smuggling, software piracy and money laundering."
Obviously the many legitimate reasons for using the MOD chips (backups, foreign titles, etc.) are ignored here. So remember, kids, when you mod your Xbox the terrorists win! I guess it's a good thing for the US arm of Hezbollah they focus on fake Viagra and cigarettes. Dealing in modchips might get them caught more often.