This is actually increasingly common, and in some states the burden of proof is on you to prove that anything confiscated was not purchased with money obtained illegally. In addition, many states allow 100% of the profit from what is confiscated to go directly to police departments. One department where I used to live has both a police Hummer and a Tank. You can read about a state by state study at:

http://www.ij.org/images/pdf_folder/other_pubs/assetforfeitu... [Note: PDF]