This appears to be a total scam.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
There is no US government agency by that name. It could be a private company that is representing the copyright owner. You should seek a copyright attorney for specific legal advice.
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You should do what you can to verify what this is relating to. While I agree that anyone who sends correspondance like this purporting to be from some agency sounds like a SCAM, it could be some third party enforcing someone's IP rights.
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There is an organization known as Copyright Enforcement Group, which is considered legitimate (although highly controversial). If your letter came from this group, it is probably legitimate, and you should retain legal counsel to advise you. Here is a link to the web-site used by this group. https://www.copyrightsettlements.com/faq.html. Here is a link to a discussion about this group.http://fightcopyrighttrolls.com/discussions/ira-siegel/comment-page-2/ Most commentators agree that you should retain counsel to settle this----ignoring this can be dangerous and cost a lot more money to clean up. Here is another useful article. http://torrentlawyer.wordpress.com/2012/11/02/ceg-tek-dmca-scare-letters/ Bottom line--hire a lawyer with experience with these guys. I handle these cases and can help you but it is not cheap.
You should contact an attorney who is in your state and who focuses in BitTorrent cases (in defense of people accused of illegal downloading). This is a very focused area, and only a handful of us really focus on It. I'm one of them, but I'm in Florida and can only deal with cases in my own state. I've posted below some links to the EFF website for more guidance.
Do not simply discount the letter; it may be legitimate; therefore it's important an attorney evaluate it. That said, if it threatens criminal prosecution, instead of mere civil action, it sounds highly unethical. Contact a BitTorrent defense attorney and show him or her a copy, and they can properly advise you after seeing the letter.
To schedule a consultation, call my office at 407-965-5519. I am licensed to practice in Florida only. My answer does not create an attorney-client relationship, nor does it constitute legal advice. Proper legal advice can only be given after learning all circumstances and conducting a comprehensive examination, including being able to ask questions, and cannot be given just from reading one question on an Q&A board such as this.