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The reputation and financial circumstances of the entire Peddie family were compromised by chartered accountant uncle Donald Smith Peddie and in the 1880s making money by his architect-developer nephew John Dick Peddie became even more important than it had been.

As a result of the divorce action by one of his clients, Donald Smith Peddie had fled to the USA in Nov 1882 and was found to have liabilities of £75,000 and realisable assets of £4,565, chiefly represented by the house John Dick Peddie had built for him in Trinity. John Dick Peddie's £800 bond on that property was amongst those 'left out of view' and the Peddie family had to subscribe heavily towards the £25,940 missing from the accounts of the Friendly Society of Dissenting Ministers founded by Rev James Peddie, which his accountant had been raiding since (at least) the old man's death in 1845.

Donald Smith Peddie began practice as an accountant in 1831 and joined the new Institute of Accountants in Edinburgh in 1853. He was a member of Council from 1872 to 1876. During the 1870s he backed some business ventures run by William Cornelius. It all ended in a series of legal actions in which each claimed debts and unpaid fees from the other. Then Cornelius issued a summons against his wife and Peddie in a divorce action, claiming that Peddie, then in his mid-sixties and a member of the Institute's Council, had had sexual intercourse with Cornelius' wife Elizabeth in his office, at the Cornelius residence and in various other places.

Cornelius' letter to Peddie included:

My long felt suspicions are then now at last realised into Truth, the enclosed is a Copy of one of your corruptious letters written by you to my wife, I might have sent you a Copy of an other one, but they are all so filthy, so much so that I do not like to soil my hands with them. These are the deeds committed by D S Peddie, Esq., my particular friend, who has gone every Sunday to Church, I say read this letter you fearful monster, you come as a Wolf in Lamb's Clothing to my house, why could you not leave me alone. Satan look at your destruction, what have you made of my poor Wife: a hur, a hur corrupted with your filthiness, poor soul. God have mercy on her and forgive her. Do now what you like, you have done your utmost. If the Law of this Country would permit me I should know how to deal with you, give me satisfaction and do not turn a coward in the bargain. I am entitled to revenge and will have it. I shall have some of this letter printed in large type and post them up on walls, yes even on the pulpit of your Church.

At this point Cornelius received a letter from Peddie in London saying that 'he was obliged to go home for a few days'. He was then rumoured to be in Spain. His property was sequestrated and he was bankrupt, as was Cornelius. After further examples of his frauds had come to light, a warrant for his arrest was issued in Dec 1882, with a lurid poster issued by Edinburgh City Police offering a reward of £100. He was described as 'an accountant, 74 years of age' and possessing a 'Scotch accent' as well as 'a furtive look and a reserved manner'.

In Jan 1883 The Times newspaper reported that Peddie 'was buried in Philadelphia two months ago in Potter's Field, under the name of John North'. In that same month the Institute resolved to give its Council full power to expel any member found guilty of Breach of Trust, fraud or misdemeanour of a similar kind. The rule came into force in the following year.