Surely someone from the police IT team ought have been there to save everyone the hassle. It should have taken only a few minutes for a person of average intelligence to determine that he was in innocent.
This was 2008, things have moved on a bit and hopefully everyone is a little more savvy. I think give them the benefit of doubt and hopefully things are a little more intelligent now...
Having a 2008-tech-savvy cop in 2008 is just common sense. If the description is accurate, the two guys who came to confiscate the computers were completely clueless and would be easily fooled by anyone reasonably knowledgeable with computers.
He could be stealing credit cards using a VM stored in a USB stick.