Let the downvotes begin...
I totally disagree with MacItaly. I would absolutely not pin behavior like that on sickness. In spite, and it is definitely spite, of what PhD holding "specialists" really advocate for labelling common indecency to an illness, I don't happen to think so at all. The actual definition and culmination of becoming a criminal by definition isn't all that important compared to the understanding of societal structure and what people will and will not tolerate.
I have an 8 year old. She can definitely understand the whys and hows. She's amazed I'm not in jail right now considering how much respect I have for the structure of the world around me. If I got thrown in the pin her mom wouldn't have to say much more than - Yeah, someone finally got fed up with him. Maybe he should have learned more about the law before deciding to disregard it. He'll be out in a year unless he's good... so pretty much a year.
I'd expect your concern may be in the avenues of avoiding an impression that carves out a similar path for the child. Or a fascination with people who demonstrate that behavior. Like giving them a pass because his mother was like that. To that I guess I wouldn't step around the concept of doing bad things equals being treated like a person who does bad things. Every kid learns the idea of "trouble" pretty early in life. Understanding that adults also get in trouble isn't a bad thing and is not particularly hard to explain. But being in trouble should never be excused as a byproduct of a sickness unless it actually, irrefutably is.
You listed a series of questions that all come down to the same general question - do you sugar coat this? Or do you spell it out literally? Or something in between?
Personally I wouldn't sugar coat anything. But I also wouldn't hold it against the mother that she happened to get put in jail. Actually, I wouldn't even speak of it negatively at all but that's just me. My words of encouragement would go to the mother and not so much the child. For him, I would treat it as a societal expectation and an axiomatic rule in life that the well being and respect of everything surrounding you is essential in preventing that eco system from collapsing in on itself. Sounds wordy, but it can be applied to something as simple as the honey badger and the honeyguide (the bird that allegedly spots bees for the badger). In real life, the badger would be totally fine. But in the example, if the badger doesn't leave a little honeycomb for the guide, neither one will eat tomorrow and everything falls apart. This time, your mom ate the whole honeycomb.
Sounds a little like sugar coating, but I consider sugar coating to be a little more like "mommy went away to get better" which I feel is worse than a lie. Mommy actually went away because the world is an unfair place and she did what she had to do to survive. Just so happens what she did operates outside the tolerance of the world around her and she was just careless enough to finally have them throw her in jail for it. She may not have known of the various alternatives to financial crimes that could have done the same job without being technically illegal. In other words, there's almost always another way.
We all commit crimes every day. I live in a region that is number one in the whole country for idiots running red lights. Yes, you can go to jail for that. Keep doing it and you go back to jail. Keep doing it and you could go back for a whole year. Same for parking tickets, jay walking, violence, fraud, theft, or generally just being a nuisance. What defines a criminal is simply the fact that something was enough of a problem that it warranted making a law to keep it under control. Often those laws don't make sense and sometimes they are in effect but never enforced. But none of those red light running "criminals" are sick. They do that because they disregard the expectations of the ecosystem they belong to.
What his mom did was an action taken out of circumstance, and probably a wealth of experience up to that point that internally suggested no other sane way to accomplish the same goal. Not a disease unless we want the word disease to have the same meaning as the word genius after the apple store imposed the genius bar upon us. You can explain this to an 8 year old. You can rationalize it without glorifying or vilifying it. You can explain it is not something to be revered or despised and that his own life is his to choose, same as his mother. She chose to do things the world disagreed with and had to go to jail. He doesn't have to do the same thing, but he doesn't have to hate her for doing it either.
Just my two cents.