Disable permissions inheritance on the folder and copies current permissions to the folder. 

This method can be accessed through the Permissions.asmx file located in:

~/Workarea/webservices/WebServiceAPI/Permissions.asmx

[SoapHeader("AuthHeader")]
[SoapHeader("RequestInfoHeader")]
[WebMethod(MessageName = "DisableFolderInheritance", Description = "Deletes a user or a group from the item's permissions")]
public bool DisableFolderInheritance(long id);

<SoapHeader("AuthHeader")>
<SoapHeader("RequestInfoHeader")>
<WebMethod(MessageName = "DisableFolderInheritance", Description = "Deletes a user or a group from the item's permissions")>
Public Function DisableFolderInheritance(id As long) As bool