Kernell, the 20-year-old son of Tennessee Democratic state representative Mike Kernell, was linked last week to an e-mail account that was used to post a purported confession of involvement in the breach of Palin's Yahoo Mail account that was posted to an online forum.
According to Wired.com and Portfolio.com, the IP address used to access Palin's Yahoo account belongs to Pavlov Media, an Illinois-based ISP that provides Internet service to the Knoxville, Tenn., housing where Kernell lives.
Federal investigators searched Kernell's apartment in Knoxville, Tenn., over the weekend, local newspapers report.
Three of Kernell's friends testified behind closed doors at the grand jury hearing, according to The Chattanoogan.
U.S. Department of Justice spokesperson Laura Sweeney declined to discuss the grand jury's actions. She said that the DOJ's review of the allegations that Alaska Gov. Sarah Palin's personal e-mail account had been hacked is ongoing.
Kernell's family has retained Wade V. Davies, a Knoxville attorney with Ritchie, Dillard & Davies PC, to represent him.
In a statement to the media, Davies said, "This is a difficult time for David and his family. The Kernell family wants to do the right thing, and they want what is best for their son. We are confident that the truth will emerge as we go through the process."