THE WRONG THIEF (FCE)

Alex and I were walking for to the shopping center the previous (last) Monday when a shop assistant (store clerk) accused him of have stolen in (having stolen from/stealing from) his shop. Then, the police came. All the people was were staring at us because of the fuss.

It was said that when the police took him to the police station, he (here, "he" refers to "the police" becuase "the police" is the subject.  From the story, is seems like it was your friend who accused you, in which case, you would have to say "my friend accused me...)" accused me of the shoplifting and at the beginning, I was a little worried because neither of us had done anything. But, later, I thought he wouldn’t be wasn't capable of doing something like that.

Finally, when the police checked the camera recording (security camera), they watched (saw) that the thief was another person who wore the same jacket, and that Alex and he (I?) denied having said what those people told me said.

No matter what people said about Alex, I knew he was a true friend.