At the Cosmopolitan, a luxury hotel and casino in Las Vegas, "just the right amount of wrong" is the naughty fun you get for $200 a night. At the $57-a-night Motel Caswell in Tewksbury, Massachusetts, just the right amount of wrong is what the federal government says it needs to take the business from the family that has operated it for 57 years.

That amount, it turns out, is tiny. During a November trial before a U.S. magistrate judge in Boston, a federal prosecutor cited one heroin overdose and 14 incidents in which guests or visitors were arrested for drug crimes at the motel from 1994 through 2008—a minuscule percentage of the 200,000 or so room rentals during that period—to show the business is a "dangerous property" ripe for seizure.

As Russell Caswell, the motel's 69-year-old owner, explained to the Associated Press, "They are holding me responsible for the actions of a few people who I don't know and I've never met before, people who rent a room." Welcome to the topsy-turvy world of civil forfeiture, where property can be guilty even when its owner is innocent.

Under federal law, property used to "facilitate" a drug crime is subject to forfeiture. In 2000 Congress added a safeguard aimed at preventing just the sort of injustice Caswell faces: An owner can stop a forfeiture if he shows, by "a preponderance of the evidence," that he did not know about the illegal activity or that, once he discovered it, he "did all that reasonably could be expected under the circumstances to terminate such use of the property."

Caswell, whose father built the motel in 1955, has not been accused of any wrongdoing, and the local Motel 6, Fairfield Inn, Walmart, and Home Depot have had similar problems with drug activity. But the government argues that Caswell was "willfully blind" to drug dealing and could have done more to prevent it.

Caswell, who has been running the motel since 1983, says he has no way of knowing what his customers are doing behind closed doors. He has always cooperated with the police, calling them to report suspicious activity and offering them free rooms for surveillance and sting operations.

In 2009 he got his reward: a forfeiture notice. Police had never suggested additional steps he could take to discourage crime or warned him that the motel—which supports him, his mother, his wife, their son, their daughter-in-law, and their granddaughter—could be at risk.

This cruel surprise was engineered by Vincent Kelley, a forfeiture specialist at the Drug Enforcement Administration who read about the Motel Caswell in a news report and found that the property, which the Caswells own free and clear, had an assessed value of $1.3 million. So Kelley approached the Tewksbury Police Department with an "equitable sharing" deal: The feds would seize the property and sell it, and the cops would get up to 80 percent of the proceeds.

Under Massachusetts law, by contrast, police would have received only half the loot, and forfeiture may have been harder. State law says a seized property has to be used not just to "facilitate" a drug crime but "in and for the business of unlawfully manufacturing, dispensing, or distributing controlled substances," which suggests a stronger connection.

The Institute for Justice, the public interest law firm representing the Caswells, argues that the federal "equitable sharing" program helps police evade state laws aimed at preventing forfeiture abuses. A 2011 study reported in the Journal of Criminal Justice found that the stricter a state's forfeiture law, the more likely police are to enlist federal help.

Carmen Ortiz, the U.S. attorney for Massachusetts, says taking away the Caswells' livelihood and retirement security sends an "important deterrent message" to "others who may turn a blind eye to crime occurring at their place of business." But to anyone troubled by the guilty-until-proven-innocent rules of civil forfeiture, it looks a lot like legalized larceny.

Update: On January 24, U.S. Magistrate Judge Judith G. Dein blocked the attempted forfeiture of the Motel Caswell.