It is illegal - it's called "trespass to chattel" (chattel means property). It could also be identity theft and copyright infringement. All of these are tort causes of action.
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There may be something there, but not sure what kind of damages your brother has. Why the other person had the hard drive in the first place might also be important. I don't think this is anything the police would be interested in, so assuming your brother could establish some amount of damages, he could sue in small claims court.