The case in question was United States of America v. $124,700 in U.S. Currency (forfeiture cases name the seized items as the defendant). Emiliano Gomez Gonzolez was pulled over for speeding in Nebraska in 2003 while driving a rented Ford Taurus. In the car was a cooler with $124,700 in cash, which was seized on suspicion of a drug crime. A drug-sniffing dog barked at the car and the cooler, which was taken as evidence.
Friends of Gonzolez testified that they had pooled their life savings to purchase a refrigerated truck in order to start a produce business. Gonzalez was sent on a one-way ticket to Chicago to buy the truck, but it had already sold. He had no credit card, so had a third party rent a car for him. He says he hid the money in a cooler to prevent it from being stolen.
The District Court had found for Gonzolez, saying that there was no evidence of drug activity. The Appeals court disagreed, with a strong dissent by Judge Donald Lay.
Forfeiture laws have long been heavily abused in the name of the war on drugs. In 1991, the Pittsburgh Press ran a six-part series on forfeiture abuse called Presumed Guilty: The Law's Victims in the War on Drugs which can be found in various places online.
UPDATE: Ed Brayton has also commented on this story at Dispatches from the Culture Wars.