I think if you make one individual accountable for every mistake a company makes, then you change the nature of business. In this case, you want the CEO and board to go to prison because some low-level employee made a mistake on some paperwork. That could be avoided; simply don't report car thefts to the police. Charge people $20,000 up front to rent a $20,000 car, and say "if you return it and we feel like it, we'll give you $19,000" back. If the car gets stolen, not their problem anymore. If they mis-file some paperwork and don't give you $19,000 when you return it, well the contract you signed said "if we feel like it" and they didn't feel like it, so I guess keep the car if you want to. But, this business model would never work, so there simply wouldn't be car rental companies anymore.

There has to be some abstraction layer between a company and its officers, or companies can't take the risk of delegating anything to employees. The reality of society is that sometimes something is going to get fucked up, and the dispute resolution process is expensive and messy. That's the legal system, and it exists for a reason. Ideally, most people don't have to use it very often, and the 0.001% of the time when something fails catastrophically, the pain of that one individual that it didn't work for makes society less painful for everyone else longer term. This person lost their real estate license, so that thousands of other people can drive someone else's car while they're on vacation without having to buy the car with cash outright. Net win? Probably.

To some extent, you can always reduce the risk of anything to as low as you want. It's just that at some point, the cost of that makes the entire endeavor not worthwhile financially. Risk aversion is a tax on innovation, so you don't want to become too risk averse. I think society has found a decent balance here.