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There's no disincentive to cheat on Stars if this is the way they're handeling it.
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Wrong. There is plenty of disincentive. You have two horses in a big tourney. What for? You want to make a big hit. But you will be caught - lose your win and will be banned from the site. Before you make this big hit you probably tried it 10 times, so you lost your 20 buy-ins in the process too.
Another example - police catches a small cheat who stole some item from the department store. Would they confiscate his his house and his bank account? Maybe in Saud Arabia.
Also Party never said that they confiscated more than they discovered was stolen by cheating.
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Party confiscated
all funds in all of ZJ's accounts:
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A decision has been made, in consultation with the Poker Room Manager, Legal and Management, to close these accounts permanently and confiscate all funds.
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They also confiscated all of JJ's funds. I think it's safe to assume that Party will confiscate all funds in a cheater's accounts.