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Part of the point, at least in so far as the DMCA is concerned, is did they know the stuff was violating copyright that was being loaded? If they did and didn't do anything about it, then they are guilty of copyright violations/DMCA violations. In this case, they had to know that a lot of the material being loaded violated copyright...though the difference between knowing much of it must violate copyright, and knowing about specific instances and not doing anything is pretty big.
The little I've read so far about the inditments and evidence suggests they knew of specific instances and did nothing about it (though they appeared somewhat scrupulous on the outside about doing take downs once NOTIFIED, but safe harbor doesn't protect you if you know and don't do anything even if you don't receive a take down notice).
As for much of the use, it was for copyright infringement plain and simple. To my mind it will be interesting though if the US gov't can prove in a court of law that the people under inditement deserve to go to jail and were willful violators according to the letter of the law, of if there was a good faith effort to at least toe the line, even if they were obviously profiting off of copyright infringement.
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