I’ve heard this phrase on 2 BBC America programs: stitching people up. I know it doesn’t mean suturing and I’m assuming it means make people laugh. Did I translate correctly? Thanks.
To stitch someone up, is to frame them, to deliberately land them in trouble.
If you download the Flash game “The Full Tickle” from the following link and play around with it a little, you will eventually hear the phrase used in context, as Big Vern, believing that he has been betrayed by his associate shouts “I’m goin’ daaaahn, Ernie! You’ve gone and stitched me up like a kipper!”.
No it means to inconvenience them, or in an extreme case to betray them.
Zorro has the better meaning.
Watch a few episodes of ‘The Sweeny’ (UK 70’s cop show - Sweeny Todd - Flying Squad - Cockney Rhyming slang), it gets used quite a lot I’m sure.
Right, I gotta scapa (Scapa Flow - Go) 
To covertly plot a way of landing someone in trouble, either unjustly by framing them for something they didn’t do or by betrayal, placing them in a situation from which there is no escaping and one which they didn’t see coming.
I always assumed it’s an expression that comes from literally stitching up someone’s clothing so that they are effectively in a straightjacket. The person is therefore trapped, framed, betrayed, “done up like a kipper”.
Except, of course, that kippers aren’t stitched up, they’re split and spread open. Bleedin’ cockneys don’t know nuffink.
I have heard it used for a milder meaning IRL, but then my life isn’t much like The Sweeney, EastEnders, The Bill etc.