Do bad role models exonerate others’ unethical behavior? Based on social learning theory and psychological theories of blame, we predicted that unethical behavior by higher-ranking individuals changes how people respond to lower-ranking individuals who subsequently commit the same transgression. Five studies explored when and why this rank-dependent imitation effect occurs. Across all five studies, we found that people were less punitive when low-ranking transgressors imitated high-ranking members of their organization. However, imitation only reduced punishment when the two transgressors were from the same organization (Study 2), when the transgressions were highly similar (Study 3), and when it was unclear whether the initial transgressor was punished (Study 5). Results also indicated that imitation affects punishment because it influences whom people blame for the transgression. These findings reveal actor-observer differences in social learning and identify a way that unethical behavior spreads through organizations.