Green’s Dictionary of Slang

1. criminal, corrupt.

1849

Sam Sly 12 May 3/2: We advise that shag butcher, Jim Yo—ng, to pay his debts, and not obtain beef and mutton under such false pretences.

2. (US prison) worthless.

1935		A.J. Pollock Und. Speaks.
1936		San Quentin Bulletin in L.A. Times 6 May 7: SHAG, worthless.
1949		Monteleone Criminal Sl. (rev. edn).