DENVER (CBS4) – A new law took effect on Wednesday designed to combat auto theft. It makes operating a “chop shop” a felony.

Chop shops are where vehicles are dismantled and the parts are sold off. That’s what police thought they had when they raided a business nearly three years ago. But charges have still not been filed and the owner of the business is suing the police in federal court and just won an important court victory.

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Doug Rathbun (credit: CBS)

Doug Rathbun (credit: CBS)

Back in 2011 the Metro Auto Theft Task Force raided Doug Rathbun’s shop, made arrests and seized vehicles. Rathbun fought back by suing the individual officers in federal court where Judge Richard Matsch has now ruled the search warrant was invalid.

Armed with a search warrant, weapons, dogs and more police, Denver Performance Auto was raided in November 2011. Rathbun was arrested, suspected of operating a chop shop.

“They thought this was a chop shop and a drug house … I was doing child pornography here. It was a laundry list of stuff,” Rathbun said.

Rathbun pleaded guilty to driving with a revoked license, but was never charged with operating a chop shop. He says he was set up by an ex-girlfriend who the police believed.

“I broke up with her and she was one of those, ‘If I can’t have him, nobody will’ kind of girls. Just kind of crazy and she just lied,” Rathbun said.

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He said the police seized about a dozen cars but returned only three. The rest were were auctioned off, he believes. Now a federal judge has ruled that the search was illegal.

“That it was overly broad and it was a general warrant that allowed them to search for anything without any constitutional protections for Mr. Rathbun,” said Mark Burton, Rathbun’s attorney said.

The shop owner claimed the cars were his or those of customers. Bumpers found on the roof were merely being stored there. Police thought otherwise.

Rathbun says his business has been damaged.

“At first it was like a ghost town. Nobody wanted to come around her at all; no customers, no friends, nothing,” he said.

He can fix cars — now he’s trying to fix his reputation.

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The commander of the Metro Auto Theft Task Force would only say the warrant they used was signed by a Denver judge.