I'm not so sure Unseelie, just because a player saw someone not speed modding does not mean they do not when there are no witnesses. Seems to me anyone with half a brain would not be stupid enough to speed mod in front of a witness.
Perhaps a perma-ban should happen be for a second offense, and a first offense is a say a 7-day ban. That would give the offender a lesson and a chance to amend their behaviour and if that same player is caught twice then thats pretty conclusive. How many of the older players on here have been caught speed-modding in the sanction threads? I don't think theres any. I am 90% sure it's new guys trying their luck and crying when they get caught.
I think I remember reading somewhere that sometimes speed mod does not properly de-activate in certain versions of the Mod Manager program so a second chance could be given and the offender monitored on serving his ban with the advice that he does a complete re-install and never activates speed-mod in FLMM again.