Of course, Jim Straw is not here any more to speak for himself...
I had a look into this, to the degree I can...
The main claim by the SEC against First American Bank Limited (FABL), which Jim Straw was part of at the time, seems to be the claim that information given to investors was false or misleading ("misrepresentations and omissions"). 
There is a journal called the Blue Sky Law Reporter, which comments on state securities law cases. They reported on this case. Unfortunately, I can only see snippets of their report (via Google Books).
The Blue Sky Law Reporter reported the following.
"Mr. Straw also answered the Security Bureau's allegations of fraud arguing that no investor has lost money and that he had pledged his own assets to guarantee his depositors' accounts." 
Another sentence says...
"Mr. Straw produced a document of trust placing all his assets, present and future, in trust for the benefit of depositors of FABL upon his death; upon the voluntary liquidation of the bank; or upon the governing body regulating the bank entering an order of insolvency against the bank." 
Another interesting passage from the Blue Sky Law Reporter is the following.
"In this particular instance, this Administrative Law Judge must agree with Mr. Straw. The analysis would be different if these savings accounts or certificates of deposit were valued in gold or a foreign currency whose value could fluctuate with the market, but here it is evident that these securities do not have a value beyond that of the money the depositor places in them and the steady accumulation of interest. The securities by their nature are not subject to resale at a quick profit due to some increase in value for reasons other than further deposits of the investor. To adhere to Mr. Long's test would be to sacrifice substance to form." 
Anyhow, this complicated comment (which I don't fully understand) suggests that this is may possibly not have been a cut-and-dried case, at least not in all its aspects.
Since there were no monetary damages awarded against him (as the damages were waived) , it probably made no sense to appeal, since that would have cost a lot of money in itself (even if he ended up winning).
It sounds like no investors lost any money, and maybe that's also partly why there seems to have been no effective penalty either, as far as I can see (except that they had to close down the bank).
I prefer to give the benefit of the doubt, and perhaps put it down to a venture that didn't quite go as planned.
Just some thoughts.
- see under "Civil Action Filed Against Harry Hone"