Ronald "Rondo" Wright has lost £2000 under Proceeds Of Crime laws even though he was able to prove it was left to him by his mother.
The Dundee supplier gave up a legal battle to keep the money after lawyers for the Crown Office, in a rare civil case, argued he planned to use it for "unlawful activity" and not, as he claimed, to buy a car.
His case was highlighted as the Crown's Civil Recovery Unit (CRU) unveiled its annual report.
The elite unit in 2013-14 used civil Proceeds Of Crime actions - those judged on the proof of "balance of probabilities" rather than the tougher "beyond reasonable doubt" of criminal cases - to net £4.4million from suspected underworld figures.
However, Scotland's Solicitor General Lesley Thomson stressed the mere £2000 taken from Wright showed the unit, unlike most other parts of the prosecution service, could stop crimes taking place in the first place.
Ms Thomson said: "We, as prosecutors, usually look at something that has already happened. In this particular case we stopped something happening. This was not just 'disrupt'; it was 'prevent'."
Scotland's 2002 Proceeds Of Crime Act allows the CRU to chase cash and assets they believe are the proceeds of criminal activity, even if the individual holding them has not been convicted.
But a little-known clause in the legislation also allows the unit to go after cash they believe is intended to be used unlawfully - such as to buy drugs or arms for sale.
Wright's £2000 was seized - along with some heroin - during a police raid on his home in February 2009. He was not convicted as a result of the raid and argued the money came from an inheritance from his late mother.
The CRU, using intelligence about the previously convicted dealer, argued he was going to use the money in his criminal enterprise. Initially, Wright fought the case but eventually gave up, failing to attend a court hearing on the matter.
Linda Hamilton, the head of the CRU, said: "This is a really powerful part of the civil recovery legislation. We can and will use it if we think cash - even if it may have been obtained lawfully - is going to be used unlawfully."
Ms Hamilton stressed the importance of such relatively small cash forfeitures on communities where criminals like Wright operate.
She said: "The sum is quite small. We have big cases where we recover £100,000 or so - and that is great. But taking £1000 or £2000 from people at the lower end is quite important for the community to see we are tackling these individuals as well as going after the folk at the top of the tree."
The CRU last year also continued to target some of the biggest suspected criminals in Scotland - and the family members, friends and associates they use to hide their money.
Ms Hamilton said: "We follow the asset, not the name. If somebody has a lavish lifestyle, a nice home and cars but they have no record at HMRC then either they have fiddled their tax, which they should not be doing, or they do not have a legitimate income. Either way, we will step in and have a look.
"If they think 'I'll put this car in my mum's name'". Well, that doesn't work."
Essentially, the CRU deals with two kinds of cases. The first is made up of forfeitures of cash seized by police and other law enforcement agencies during operations that do not end in a convictions, such as the raid on Wright.
There were 608 such referrals in 2013-14, close to a peak figure of 683 in 2011-12.
The second kind of case is asset recovery, battles, usually settled out of court, to secure homes, cars and sums of money in bank accounts in the UK or abroad believed, on the balance of probabilities, to be the proceeds of crime. There were 166 referrals for such asset recoveries in the year, the second highest on record.
The amount of money raised through civil recovery in 2013-14 was also the second highest on record. Only in 2010-11 was more money raised, thanks to a single bank deposit of £6.6m seized from a Russian businessman.
Ms Hamilton, however, stressed her core aim was not just to raise cash. Instead, her objective, increasingly in partnership with law enforcement disruption campaigns, is to make it harder for criminals to operate.
The CRU, for example, in 2013-14 served 280 disclosure notices, more than ever before. These force suspected criminals and their associates and family to co-operate with the unit, garnering key intelligence and frustrating their lives and work. Such interviews, said the unit's annual report, are "proving an operationally effective tool in disrupting serious organised crime".
l Basketball in Scotland has been awarded £600,000 from a scheme that uses the money recovered through the Proceeds Of Crime Act. The funding boost adds to the £11.5m already given to sports in general through the CashBack For Communities programme, officials said.