This is so true. Years ago I was brought into a company specifically to improve their software quality process, but without being aware one of the company owners (of which there was two) was against be being employed for that purpose. I uncovered a lot of incompetence and outright corruption with some employees. The 'good' owner went on stress leave, and then pressure was brought to bear on me, resulting in me quitting on the spot one Monday morning; not my proudest moment, but I couldn't take the pressure any more, and my ally was no-where to be seen. Fast forward a decade, and I interviewed with someone who used to work at the same company; it turns out that my leaving had been framed as 'fired for incompetence', and word had been put around part of the local industry that I was hard to work with, unreliable, bad at my job etc. I laugh about it now, but at the time it really bothered me about the possible damage done to my career and reputation.

I don't know what country you're in so I won't speculate on what's legal or not in your area, but here in the U.S. it's illegal for a prior employer to provide false information to a prospective new employer during a background/reference check. If your former boss tried to blacklist you like that, he'd put his company at risk for a civil suit. And, while it's not illegal to truthfully say that a current or former employee is a bad employee, doing so rides the thin line of opening the company up to a libel lawsuit.

Generally speaking, a company might "dish the dirt" on a former employee if there are criminal charges to back up the claims. Even then, legal and HR will likely frown upon it. Usually, when the new company calls the old company for a reference, the old company will say something like "Yes, $employee worked here from $startDate to $endDate" and refuse to divulge any other information in order to avoid any semblance of libel.

Once again, this is my limited experience in SMB and government settings, I have no experience in mid-to-large businesses, Fortune 500 companies, and Silicon Valley startups. We've all heard stories about managers at such companies going around HR and discussing potential hires at the bar or on the golf course.