An extortion scheme, designed to trick a victim into doing their bidding, such as paying money to not have the information made public.
Generally where sex is used, where a victim is tricked into a compromising position, and is then forced to either do the other's bidding such as giving away secrets, safe combinations, or in simply paying them money.
As old as time, but prior to the advent of Photography, video equipment, tape recorders, and the Internet, the scenario involved a person tricking another into a compromising situation.
Then an associate pretending to be a law enforcement type, relative, or whatever, would burst into the room where the sexual act was happening, and threaten to expose the victim to their spouse, the public.
Usually for a payment, the matter was then forgotten, or used to keep control over the other, including gaining additional payments.
There are two thoughts as to how this name came to be.
One is that it was taken the way Badgers were caught.
Another is that it derived from the first such con being done in Wisconsin, known as the Badger State.
Irrespective of how this accomplished, IT IS ILLEGAL.
Noteworthy: In the 19th and early 20th Centuries, the mark generally sought after was a married man. They would be placed in a compromising situation, and blackmailed due to how Adultery was viewed in society at that time.
Homosexual men were also targeted, due to Homosexuality being a criminal act at the time.