first... wrong thread. second, bad idea to come to "the ounce" looking for legal advice. most attorneys will give you an hour of consultation for free.
and no, you can't sue. cops can legally do almost anything they feel necessary to get what they need to arrest someone. in a narcotics operations where they are undercover they can even participate in doing drugs to prove they're not cops. believe or not, that's true, at least where i live. they have that right and there it's completely legal. it sounds like in your case the cops are banking on testimony of some sort to try and recharge you and have you convicted. obviously the DA didn't feel the case was strong enough the first time around so the cops are back to square one. they already know you write graffiti but they now need to see you do it or get testimony. let me add that even someones testimony other than your own isn't great evidence. especially in your case. they're asking other criminals for information, and that doesn't hold up to well in court. and there's methods to discount any criminal testimony. the worse part for them, even if anyone does rat you out, they probably won't show up in court and their testimony would come in the form of a "confidential informant". which makes the entire thing weaker. sure, it's enough to arrest someone, but in reality it's not enough to charge. a DA probably wouldn't charge on the basis of a confidential informant in a case like this anyhow.
even so, it's important that the people who know you don't say anything. don't even lie about the situation, just don't give the police anything. a lie can end up turning the situation into a bigger mess. the cops are only talking to everyone because they want to prove you DID do it, not to prove that it wasn't you. make sure all your friends know to not tell the cops anything. i think they are legally obligated to give an ID or full name and address, but other than that they don't have to say a word. if the cops are threatening they should tell the police that they aren't going to talk to them until they get a lawyer. don't let the cops intimidate you, ever!
another thing, the cops can only question someone briefly. after a short amount of time you have the option of leaving. the cop has to either arrest you or let you go at that point. and if he arrest you under no grounds than you would have a case. so chances are he's going to let you go because harrassment suits can be a bitch for the police. and many suits are actually settled out of court (free cash!)
point is, they feel by you doing graffiti that you fucked with their lives, and now they want to fuck with yours. they'll probably get over it after a while if they can't pin anything else on you. eventually they're going to remember that there are more crimes in the world going on that deserve their full attention other than graffiti.
as for now, you and a few friends might want to consult with an attorney. tell them about the harrassment and that you're being implicated in various crimes. if the cops do come to arrest you and perform a raid and keep messing with you, you might have the option to get a restraining order from the police (i'd love to have one of those).
and you and your friends need to stop getting arrested so damn much. it's not cool.
that'll be $250 for this consultation, and i do accept paypal.
