From what I've been reading for an hour:
Framer, the government didn't seize "all" of his work. J. Edgar Hoover ordered work Tesla conducted with Westinghouse that had military implications classified.
As for the second part of your very legitimate question, I'd have to say that J. Edgar Hoover seized Tesla's work out of extreme paranoia on Hoover's part. I've studied the FBI before so I know something here. Hoover was extremely enthralled by pseudoscience. It is well documented that he frequently took information from "psychic" Jeane Dixon and investigated remote viewing. COINTELPRO was often not only oppressive, but also a huge employer of bogus science.
I should also add that the gap between pseudoscience and science isn't always clear to me. Tesla himself didn't always use Francis Bacon's methodology. He often used abstract philosophy.