If the Tewksbury PD had knowledge, did they not also have the ability to give the info to a local county or state prosecutor? And if they knew and did nothing, either the community by way of the police chief give tacit approval, or, there is corruption somewhere.
It went to federal trial because the feds have worked out a system where they'll take on all the legwork and trial expense for the local police, in exchange for 20% of the take ($200K in this case).
It's 100% about money, and 0% about reducing crime or prostitution (other properties nearby have identical crime rates, but aren't worth as much, so they're not targeted). Police departments use the money from civil forfeiture to pad their budgets. In some cities, the amount of money received each year from civil forfeiture is 3-5x that provided by taxpayers!
If you want to go wild with rage, spend some time reading up on the civil forfeiture laws and abuses. IMO there is no greater example of bad law and bad government today than civil forfeiture. I'm not alone in thinking so, either. It's that evil.
The US has enacted some truly bad laws in the last decade or so, but civil forfeiture is so far out in front as "worst law in widespread use" that is has no real competitors for the title.