Can i sue police department for defamation of character?

I work for state corrections and have for 10 years. I also worked as a part time police officer for a small town police department with approximately 15 officers from 05-08 and I am still a certified law enforcement officer but not currently active. I was pulled over by the police department i worked for due to my tag light. When the officer (which I do not know)) approached my vehicle she stated I was stopped for my tag light and she needed my DL, ins card, reg. When I opened my wallet to the spot where I keep my license it wasn't there. I then started to pull out every card half way to see which one was my dl. At the back of one compartments was my old police id. I did not pull it all the way out and went on to the next card. At this time the officer asked if that was a police id. I responded yes it is, I worked there part-time from 05-08 but I just work corrections now. She stated oh ok, well just give me your ss#, so i did. She walked back to her patrol car and I continued to look for my dl. I then found it in another compartment of my wallet. I held it out the window and stated I found it. She returned to my vehicle and stated everything checked out and your good to go, have a good night. The next night I get a call from my supervisor saying the police department is looking for me and they are charging me with a 3rd degree felony impersonating a police officer. My supervisor had to write an incident report stating what they told him. I then called the police department and asked what was going on with this. The Lt. told me i needed to bring the id to them now, which I did. I told the Lt. what happened and he stated well that's not what she said. I told him to pull her recorder (which everyone there carries) and he said oh she wasn't wearing one. They also went to my residence while I wasn't there beating on the door yelling for me to come out, loud enough for my neighbor to come outside. Now I find out that the officer who stopped me put in her report that I did not say I worked there nor did I try to get out of a ticket. But other officer with rank told her to write this up. The Lt. who I talked to along with other officers in the police department do not like me for personal reasons. And I know first hand that this department "does what they want" to a point but nobody fights them. I plan on pursuing my career in law enforcement and now I have this incident report in my file for these allegations and I am still waiting to see if they indeed charge me. On the recap.. this is a small town with 15 officers and almost all of them know me. Why would I try and use my id to get out of a tag light ticket? It has been three years the id has been in my wallet.