About a week ago, the New York Times ran an article by Jeff Leeds on the DJ Drama raid. Here's how Leeds described the beginning of the investigation:
Not long before Christmas, Jeff Baker, the chief of police of Morrow, Ga., a small town just south of Atlanta, and one of his officers were walking through a local shopping mall when they happened to pass a kiosk hawking rap music CDs. One in particular caught their attention.
The CD was “Tha Streets Iz Watchin,” with songs performed by the rapper Young Jeezy and, as Chief Baker recalled, it did not carry the name or address of the owner of the music copyrights, as Georgia law requires. Rather than arrest the kiosk vendor immediately, Chief Baker said, “We’d rather go after the source of the material. And at that point we had no idea what the source was.”
In his affidavit in support of the search warrant, Det. James Callaway describes a similar scene, albeit somewhat more officiously:
On 12/19/2006 the Affiant went to Southlake Mall in Morrow, Georgia, on a complaint of pirated music being sold from a kiosk in the mall. Affiant located the kiosk and looked at several CDs that did appear to violate the true name and address statute under the criminal sale and reproduction of recorded material. The employees of the kiosk did state to affiant that they were in the business of selling music and not just the artwork like the insert disclaimer noted. The kiosk has a large selection of "mixed tapes. ... These mixed tapes also do not have the true name and address of the true owner of the music on the disc. The true labels of the artists are Interscope Records and Def Jam recordings among others. None of the labels have their names or addresses on the CDs as required by law. The CDs were coming from a company named, "The Aphilliates".
Affidavit of Det. James Callaway, para. 2 (emphasis added).
Some things to notice in these passages. 
One thing that is apparent from both the affidavit and the quotes from Chief Baker is that the police investigating the case seem quite sure that it is a violation of Georgia law to sell CDs that are not labeled with the "true name" and address of the owner of the copyright in the works contained on the disc. But to paraphrase Inigo Montoya, "You keep using that law. I do not think it means what you think it means."
As noted previously, the Georgia "true names" provision, Ga. Code 16-8-60(b), forbids anyone from distributing, selling, or offering for sale, a CD (or various other items):
on which sounds ... have been transferred unless such ... disc... or other article bears the actual name and address of the transferor of the sounds ... in a prominent place on its outside face or package.
Ga. Code 16-8-60(b) (emphasis added). "Transferor" fairly clearly refers back to the "transfer" of the sounds to disc mention earlier in the same sentence -- i.e., the person who made the CDs by putting sounds on them. This is how the Georgia Supreme Court interpreted the meaning of the word, and this statute, just a couple of months ago in the Briggs case.
The investigating officers seem to read this statute differently. They appear to believe that it requires that any CDs being offered for sale must display the "true name" of the owner of the copyright in the sound recording(s) contained on the disc.
There are a few reasons why the officers' reading of the statute is almost certainly wrong. First, there is the plain text of the statute and its interpretation by Georgia's Supreme Court (which, basically, has the last word on what the law means). Other parts of the statute also suggest "transferor" means something besides "copyright owner" or "owner of the music on the CD." Subsection a of the statute, the "unauthorized distribution" part, forbids copying or distribution without permission of the owner of the "master" recording from which a CD is made. Although the Georgia legislature didn't use the term "copyright owner," it uses a different term (other than "transferor") when identifying who (in the legislature's view) enjoys the benefits of "ownership" and control over the music recorded on the CD.
There is also the matter of consistency with the overarching goal of the statute. While the officer's reading might be helpful to them in this particular case, interpreting the "true names" law as they do would actually undercut the purpose of this law -- which, as the GSCt. put it, "aims to protect the public and entertainment industry from piracy and bootlegging" (Briggs, slip op. at 5.) It does so by requiring people who produce CDs for sale to identify themselves. It makes the job of law enforcement easier. If all it took to make the CDs in question legal under 16-8-60 was to include a label indicating who the copyright owner was, then it would be quite easy to circumvent. And indeed, truly counterfeit CDs -- the kinds of knock-offs of commercial CDs that include complete facsimiles of genuine CD inserts -- wouldn't be covered. Where ambiguity exists in a statute, it rarely makes sense to resolve it in a manner inconsistent with the underlying purposes of the statute.
Finally, there is the issue of preemption. Although a requirement that copyright owners identify themselves on any copies containing their work does not directly conflict with federal law (there is no requirement, for example, forbidding copyright owners from using such labeling), such a requirement does run smack into the intent of amendments to federal copyright law since the 1976 Act. Specifically, the Berne Convention Implementation Act of 1988 eliminated mandatory notice requirements as a condition of copyright protection. For a state to then mandate such notice as a condition of, well, not going to jail, would seem to raise some preemption issues, even beyond those already dispensed with in Briggs.
For purposes of this case, the issue of whether the law requires that CDs bear the name of their producer, or on the other hand, the names of the owners of the copyrights in tracks on the disc, is critical. The affidavit indicates that the CDs did indicate the name of their producer -- i.e., "the Aphilliates" -- and sample images of DJ Drama CDs on the web all seem to show similar identifying information.
 No word on whether the investigating officers were drawn to any particular track on the disc, such as the quite apropos "Come Shop With Me, Part 2" (track 6), "Southerners Ain't Slow" (track 20) (the Atlanta hip-hop scene's apparent answer to "Sweet Home Alabama"), or perhaps "Pussy Muthafuckas" (track 2), a somber love ballad. And incidentally, it wasn't too difficult to locate these track names or information about who produced and performed on "Tha Streets Iz Watchin," since the CD appears to be available from a variety of online merchants and is even available for download through one of the more popular (legit) music services.
 Whether the officers just happened upon the kiosk, as the NYT quote suggests, or went to the mall specifically due to a complaint regarding the kiosk, doesn't matter much legally, although it would certainly give us some indication of whose idea this case was. The mention of an outside complaint in the affidavit would suggest the case was instigated by RIAA, but on the other hand, would the RIAA really phone in a complaint about a particular kiosk at a particular mall in Georgia? Regardless, elsewhere in both the affidavit and other news coverage, it is noted that at least later on, the RIAA worked closely with Georgia authorities on the case.