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Hello. So sorry to hear of this. It is annoying at a minimum and frightening, no doubt, when the police come calling in the middle of the night!
Before I respond, can you tell where this is happening? Laws are different in different places, so to give you good information, I need to know the where of it.
That is ok. The main thing I needed to know as the country. Since this is under US Law, it is covered by the Truth in Caller ID Act of 2009. This law gives the Federal Communications Commission power to investigate and sanction those who "cause harm" by engaging in fake caller id transmissions, otherwise known as "Spoofing."
The thing is, the FCC's acts as an administrative agency, not law enforcement, so its not a criminal thing that the police can handle. Still, the fact that the penalty is not criminal does not make it any less significant. Those found to engage in Spoofing can face fines of 10 thousand dollars for each violation of the rules.
Here's a link to an FCC form for reporting the matter: http://www.fcc.gov/complaints
You can read more about it at: http://www.fcc.gov/guides/caller-id-and-spoofing
I wish you every success in finding some calm amid this obnoxious prank.