Obviously the narrow specifics around this case are not the sole cause of prison overcrowding. It's been driven by a massive expansion of criminal codes and decades of ratcheting minimum sentence guidelines upwards and get tough on crime efforts such as "three strikes" laws. The result has been a flood of people imprisoned for money laundering, recreational drugs, petty theft and an even larger number who are simply awaiting trial. The specific case in this story is just one example.
As it stands now, it looks to me like you're just lumping nearly every crime together and insinuating that because some are overpenalized that all are.
Prison can be an entirely appropriate punishment for nonviolent crime. For certain classes of crime, it seems the most appropriate punishment because it can be difficult to punish effectively with fines. If you only fine for financial crime, you make lucrative financial crimes more appealing. Worst case they just take your ill gotten gains.