In "Ditchin'," he gets arrested for eating Quasi-Gummy Chewy Candy Fish because it is of his own kind. It is then revealed that he used to be a good student in boating school until he started cutting class which caused him to become a criminal. This scares SpongeBob since he is doing the exact same thing.
In "Ditchin'," Dale was arrested for "eating his own kind," but in the episode "The Fry Cook Games," oil was splashed on a number of people from the audience and Lou was selling them as fish sticks.
Dale was arrested, but in future episodes, he can be seen out of jail. He might have gotten out on parole again, or someone could have possibly paid his bail or could have broke out concluding that Dale could be a fugitive.
In the episode "Porous Pockets," it is revealed he is allergic to ice cream, so he could possibly be lactose intolerant.