No kidding. I have a friend whose husband was arrested on false charges made out of spite, brought by someone they thought was a friend. There was nothing of this sort of behavior, just a visit by a cop and request to go to the station with him. Very civil and low key but it really threw them for a loop, and she was one tough cookie, not the easily shook up kind. I agree, time to move and let the department pick up the costs.
I know I wouldn't want to stay in that town. If you sue & they really ought to IMO.... their lives will become hell. People who don't know what really went down will think of them as drug dealers, their children will suffer....its time to move asap IMO.