Locking him up for 10 years is just going to ruin the life of one child and cost a fortune in maintaining him.
Six months community service would be a net gain for the community, 10 years of prison is a net loss.
The function of a jail is not to take revenge, it is to keep harmful people out of society. This guy did a great job up to the point where he cracked. I'm sure he could be made to do a great job again given half a chance, and keep him under the breaking strain this time.
There have been countless words written on the subject, but one of the functions IS deterrence.
Look at it this way: you can try to launch a startup and guide it to a successful exit. If it succeeds, you get some nice cash in the bank. If you fail, you spent a few years and have no material gain to show for it.
Or, you can try to get away with a large-scale fraud. If it succeeds, you get some nice cash in the bank. If you fail, you spend 6 months doing community service and have no material gain to show for it.
Yes, it's obviously oversimplifying (ethics, experience/learning from a failed startup, what do you enjoy doing, etc.) But there has to be a significant cost of failure to prevent people from deciding it's worth a try.
Says you. I think the relevant role here is "deterrent". Stealing a million dollars needs to carry more risk than "If I get caught, I'll have to spend a lot of time picking up trash." Letting this thing go lightly is a much larger net gain when a lot more people decide it's rational to try their hand at insurance fraud.