Abstract: | Criminologists have studied the spread of fraudulent practices and techniques among perpetrators. This article attempts to contribute to the field by looking at the other side of diffusion, examining the spread of fraud among investors in a case of “intermediate fraud.” Intermediate fraud occurs when fraudulent acts are committed in or by a legitimate business. Using comprehensive archival, interview, and survey data, we analyze a business that exhibited a two‐stage pattern of intermediate fraud: It was created and operated as a legitimate business in the first stage, and then economic crimes were increasingly committed in the second stage. We use diffusion theory to guide our analysis, investigating the ways in which five factors—product attributes, buyer attributes and behavior, seller attributes and behavior, structure of the social network, and method of propagation—influence the adoption and diffusion of investments in oil and gas wells among a population of investors. The case of intermediate fraud is interesting because the factors that contributed to the success of the business in its legitimate stage are the same factors that contributed to the success of the fraud in its illegitimate stage. |