I still don't see a difference in actual prosecution risk between
1) a MO not spotting an illegal mod done before on a part M Annual
2) a MO not spotting an illegal mod done at any previous time
Either way, when they sign off the Annual they are signing a (highly technically) bogus release to service. But some 90% of planes are technically illegal to fly, anyway. If the CAA busted "technically bogus" releases to service, every single MO in GA would be gone tomorrow.
Like the old management accounting proverb "cash is king, everything else is conjecture", in this case "prosecution risk is the bottom line, and everything else is just paperwork".
Obviously, if a plane comes with obviously crap paperwork then one cannot sign it off, but if it comes with history which looks "OK" but just happens to come via a number of different companies, their signatures must be taken on trust. That's how maintenance/certification works. Otherwise, it is ripping off the customer.