I don't believe it's wide spread but exactly that is possible with the Dutch government and without any consequences.
I lived next door to one of their targets from a drug investigation. The other neighbor was involved and for the next 10 years the other neighbor was allowed to commit all manner of criminal offenses against me and stalk me and the government protected him. They protected him all the way to the courts and then the prosecutor lied in court. I filed criminal charges with the police against him for obstruction of justice. A year later it was dismissed, I filed an appeal to the attorney general and it was dismissed again. The evidence I had against him was overwhelming they simply will not prosecuted a prosecutor in the Netherlands or obstruction of justice.
The laws for using civilians in investigations here forbid the use without having a contract upfront, the civilian is not allowed to commit any crimes. However, none of that matters cause there's no effective control and absolutely no consequences. The laws and their guidelines are just bullshit for the public to read and think that it's all under control.
The Dutch government were envious of what organized crime could do and now the government is organized crime. And yes, completely innocent, non crime involved citizens can become victims of this.