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It doesn't make sense. If you were with a friend and you both were jaywalking, then both of you should have been busted. Should be: I was busted with my friend for jaywalking. 'with my friend' become an adverb explaining was busted.
In "I was busted for jaywalking with my friend" what do the words "with my friend" modify, busted? or jaywalking? Thanks very much!