Other mistake: When Oliver is meeting Fagin and his boys, he says, "Is this a laundry then, sir?" You can see Jack Wild (Dodger) mouthing that line on the left side of the screen.
Other mistake: At Fagin's place, Bill is supposed to give Nancy a back-handed slap that sends her to the floor, but there's no sound of the slap and there's no contact - it's very badly acted.
Answer: If you mean the scene where he is teaching Oliver how to be a pickpocket, then yes, Fagin knew. He is role-playing the part of a "victim," showing Oliver what it is like to steal an item from someone's pocket without it being noticed. He is employing some criminal "positive reinforcement."
raywest ★