I believe that your friend can still submit a moderation dispute ticket, though I don't really know the details of how you go about doing that. For the sake of the privacy of the banned member (among a number of other reasons), the reasoning behind a specific banning is typically never discussed in public.
There have actually been some attempts to start off a Mafia game before, so I don't think that there's anything wrong with it. There was a fair amount of interest at first, but neither of the ones I saw got very far unfortunately, though I believe that a lot of that had to do with the OP vanishing.
As for where, the Forum Games would work well. If you wanted a heavy roleplaying element, you could probably get away with putting it in the Roleplay World, but Forum Games is probably your safest bet.
(Also feel free to let me know if you do start a game, because I would be interested in joining )
Antismurf9001's post in banned members was marked as the answer