OED has 1918 for (v) 2 e Usu. in pa. pple. busted: dismissed, demoted; arrested, jailed. Pennsylvania | Gettysburg | The Star And Sentinel | 1916-11-17 p. 2 col 4. "Slang of the Army Bewilders New Comic" "Busted -- stripes taken from noncommissioned offices by order of a court martial."