Green’s Dictionary of Slang

petty criminality, cheating, constant borrowing.

1873		Sl. Dict. 144: Diddling cheating or swindling. Borrowing money without any intention of repaying it. Edgar Allen Poe wrote a very amusing article once on diddling, which he seemed to regard as a rather high art.
1963		M. Braly Shake Him Till He Rattles (1964) 50: You see if I’d always listened to folks, well, I’da never even got hip to diddling.