Social House Owner Faces 68 Felonies but Might Not Go to Jail at All

Michael Whitelaw, owner of the Social House, an Uptown sushi bar that closed over the summer, faces 68 felonies, each of which carries a maximum sentence of five years in the slammer, for allegedly cheating the state out of about $100,000 in sales taxes from 2009 to 2011.

Those charges sound stiff. Real stiff. But Hennepin County Attorney's Office officials openly acknowledge Whitelaw almost certainly won't go to prison for more than 23 months, and could get off without serving time behind bars at all.

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As explained by Professor Richard Frase, Benjamin N. Berger Professor of Criminal Law at the University of Minnesota, the reason has to do with the concept of "proportionality" embodied in the sentencing guidelines used by judges.

"Most people intuitively would distinguish between somebody who did 68 burglaries of different houses at different times over a period of time" and what Whitelaw is accused of doing, Frase says. "In this case, basically it's one criminal fraud that keeps going on and so it keeps triggering new counts as time goes on."

The guidelines are intended "to prioritize the use of prisons for violent offenders. We want to be sure we have room to put people we're afraid of behind bars," Frase continues, the suggestion being white-collar criminals don't generally fall into that category.

"You have to limit how hard you come down on [white-collar criminals]," he tells us. "In order to [lock them up], you'd have to have huge, expensive prisons."

Ultimately, Frase says people reading the criminal complaint against Whitelaw, which you can check out for yourself on page two of this post, shouldn't be blinded by the sheer number of felonies he's accused of committing.

"The [sales tax] reports are to be filed every month, so every time he doesn't do it, or files a false one, that's another count," Frase says.

Frase adds that if Whitelaw has assets the state can seize in order to recoup some of the roughly $171,391 he owes (including interest and penalties), that'd probably help him avoid prison.

The state "might make some deals with him, if he's got assets somewhere," he says. "The fact his restaurant is closed doesn't mean he has no assets."

In a statement announcing the charges, Hennepin County Attorney Mike Freeman said, "This thorough investigation by the Minnesota Department of Revenue and the charges we have filed show that Mr. Whitelaw knowingly took the money his customers rightly thought was going to the state government and kept it for his business. That type of behavior cheats the taxpayers who are following the law and cheats other businesses in competition with Mr. Whitelaw."

Whitelaw, who was charged by summons and hence wasn't booked into jail, allegedly underreported Social House sales by more than $1 million. A Hennepin County Attorney's Office news release notes that he was audited prior to 2009 by the revenue department for failing to file accurate state sales tax returns and had been told the right way to do it, the implication being he should've known better.

To read the criminal complaint for yourself, click to page two.


Whitelaw Charges

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