The Criminal's dagger is a quest item that is found at the murder scene during the Murder Mystery quest. This dagger cannot be equipped and is used to help gather evidence against the culprit during the quest. In the quest, you must use a pot of flour on the dagger to dust it, then use flypaper on the dagger to get the unknown print. You must do the same with the items belonging to the suspects. Then compare them by using a suspect's fingerprints on the criminal's fingerprint to get the killer's print.
If you lose it, it will respawn in the same place as where you got it.