In the present research, we examined a discrepancy between people’s beliefs about, versus punitive reactions towards, offenders. Particularly, appraisals of offenders along the dimension of communion (i.e., being friendly or trustworthy) should primarily affect people’s beliefs about them, as reflected in demonizing and conspiracy theories, and to a lesser extent observers’ punitive reactions. However, actual evidence of transgression should (more strongly than beliefs) influence observers’ punitive reactions. In two studies, we manipulated communion and transgression ambiguity in the context of financial offences. The transgression was presented as either an observable and clear‐cut immoral case (non‐ambiguous transgression) or as a case that involves a grey area between what is legal or illegal (ambiguous transgression). Study 1 revealed that viewing an offender as low (as opposed to high) in communion predominantly influenced demonization and conspiracy beliefs involving the offender. The transgression manipulation, however, mostly influenced observers’ punitive reactions and their underlying punitive motives. Similar findings were obtained in Study 2. We conclude that although beliefs about offenders and punitive reactions are often strongly related, they are actually grounded in different psychological processes.