Sure, that's the law - but that is not the practice, that's not the facts on the ground. The moral panics over drugs and terrorism have expanded police powers such that it is de facto possible for the police forces to just steal from you. It's not legally theft: they've just redefined it, basically. It's similar to how the US government just effectively says "the things we do aren't torture, because we're doing them, and we condemn others for doing these things because they're torture."
If you have money, you have some recourse - but if you're an average citizen, the police can with any sort of drug- or terrorism-related charge, even if you are acquitted or the charges are dropped, de facto steal your shit and not reimburse you at all.
That's not all that protective when it comes down to it - all you need to do is redefine what 'unreasonable' means in law.
It's 'unreasonable' and not 'illegal' by the way - and the latter would be even easier to get around, because you just legislate 'this is legal now', no semantic tricks required.
This is an outrageous statement.
There are special exceptions to the law, but the 4th Amendment of the Constitution explicitly protects citizens from illegal search and seizure.
http://en.wikipedia.org/wiki/Fourth_Amendment_to_the_United_...