A Schlitzohr - Schlitz for slit or slot, Ohr for ear - is a kind of crook, a man who never misses a trick, a shorty or petty criminal.
The slot in the ear came from the former worn earring torn out as penalization and badge of shame to warn everybody what kind of person that is.
Today it's a more or less respectful, esteeming term for someone who handles a situation in a raffish manner, not consequently legal but clever.
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