This is called "civil asset forfeiture" and it's extremely common in the US. For a complete analysis, see
http://www.ij.org/policing-for-profit-t ... rfeiture-4
Tl;dr: in almost all states, the cops can seize your property even if they aren't charging you with a crime, if they have "probable cause" and think the property might be related to a crime. For example, they might stop you for speeding, claim they can smell marijuana in your car, then confiscate your vehicle. You are assumed guilty until you prove you are innocent, which by the way will cost you a fortune in legal fees.
What happens to the stuff they confiscate? They sell it, and the proceeds fund police purchases like new equipment and fancy cars. Police departments around the country make hundreds of millions of dollars every year doing this.
Is this corrupt and morally reprehensible? Absolutely. Does it happen all the time? Absolutely.