Green’s Dictionary of Slang

flake v.2

[flake n.2 (1), i.e. to act in that way]

(US Und.) of police, to plant evidence.

D. Burnham ‘Police (Cops?) have Slanguage of Own’ in N.Y. Times 15 Feb. 65/3: The term for planting fake evidence is ‘flake,’ which is possibly a reference to dandruff.
[US]Knapp Commission Report Dec. 83: [W]hen police needed a gambling arrest, they would pick up somebody known to them as a gambler and plant phony numbers slips on him (a practice known as ‘flaking’) [...] 103: It is also common to use illegally retained narcotics to ‘flake’ a narcotics suspect, that is, to plant evidence on a person in order to make a narcotics arrest.
[US]H. Gould Fort Apache, The Bronx 74: A handcuffed prisoner was struggling with a burly policeman. ‘You flaked me, motherfucker,’ the prisoner shouted.
[US]B. McCarthy Vice Cop 46: ‘[D]ishonest cops who flaked people, who planted phony evidence like dope or numbers slips’.
[US]D. Winslow The Force [ebook] Monty reaches under the passenger seat and comes out with a sleeve of smack—a hundred glassine envelopes grouped in tens. ‘Oh, what have we here?’ [...] ‘You flaked me’.