You like your games mean!
Most people lose sight of the fact that the biggest detriment to a false arrest is the information it provides to the other players. We concluded the money and move penalty was unnecessarily harsh. It's your game now; play it as you like. And have fun.
I agree, since the guess is public knowledge it gives information to everyone else. You are giving away the location by being wrong especially on a 50/50 guess. This gives an opponent a reward and moves you closer to game over and a loss. That seems like enough setback.
My family is loving this game. When home alone I'd love to find a solo variant. Anyone have ideas?