Green’s Dictionary of Slang

1. to make a false arrest; the victim is then released on payment of a bribe and all records are expunged; thus stool-pigeoning n.

a.1848

Morning Courier and N.-Y. Enquirer n.p.: One of the old standing and oft-repeated charges urged with great pertinacity against the police of this city in olden times, was that of ‘stool-pigeoning.’ As this term may not be familiar to our readers, we will briefly explain it. ‘Stool-pigeoning’ is for an officer to arrest a party of doubtful or perhaps decidedly bad reputation on suspicion, and making him or her give up money or valuables to obtain liberty, when the officer would set the party free, and nothing would be heard by the public or any one else of the arrest, or anything else connected with it.

2. of one villain, to inform on another; esp. as stool-pigeoning/stool-pidgeoning n.

1839		N.Y. Daily Express 13 Sept. 2/4: Stool Pigeoning is the use of a rogue to catch a rogue, or the employment for pay by an officer of the Law of a thief to catch a thief, or to rescue through thief No. 2 what thief No. 1 has stolen.
1855		T. Haliburton Nature and Human Nature II 407: Constructive mileage, snooping and stool-pidgeoning!
1866		T.J. Dimsdale Vigilantes of Montana 58: [Road agents hold up the stage] At that Bill Bunton [who was allied with the road-agents] cried, imploringly, ‘Oh! for God’s sake, men don’t kill one.’ (He was stool-pitching [sic] a little to teach the rest of the passengers what to do.).
1867		Nat. Police Gaz. (NY) 5 Oct. n.p.: There are a number of victims [...] who have been ‘lagged’ by his mean ‘stool pigeoning’.
1949		F. Brown Dead Ringer 88: I wish he hadn’t picked on me. It’s too much like stool pigeoning.
1962		P. Crump Burn, Killer, Burn! 230: My gaze on Marion accused her of stool-pigeoning.