I realise that I'm very late in replying to this question, but I think there's a key assumption in there (which was accepted by all the answerers so far) that isn't sound.
I don't believe that Modify Memory would suffice to erase the trauma.
Let's look at some quotes from the original post.
I pointed out that the trauma would still be criminal, and he responded that he can just cast Modify Memory, so the person will have no memory of the incident (which could be beneficial to both parties; the option to not even remember a traumatic experience seems pretty tempting to me).
If the person is restored to life and no one remembers the murder, it seems like no crime has been committed.
Assault (and even some more heinous crimes I won't mention) can be "fixed" with healing/modify memory. Rejuvenate / reincarnate will even restore body parts.
PTSD causes physical changes to the structure of the brain. For instance, the website of the British NHS states
"In people with PTSD, parts of the brain involved in emotional processing appear different in brain scans. ... the hippocampus appears smaller in size. ... The malfunctioning hippocampus may prevent flashbacks and nightmares being properly processed, so the anxiety they generate doesn't reduce over time."
It can also have other physical/chemical effects. From the same source:
"Studies have shown that people with PTSD have abnormal levels of stress hormones. ... People with PTSD have been found to continue to produce high amounts of fight or flight hormones even when there's no danger."
(The effects of PTSD on brain structure, epigenetics etc. are complicated, and I don't claim to understand all of it. I won't post an exhaustive list here.)
Now, Modify Memory might eliminate some of the PTSD symptoms. If all memory of the event is removed, the victim may no longer have specific triggers. However, according to the NIH, some symptoms are constant, not triggered by reminders of the event. Such symptoms include angry outbursts, and difficulty sleeping.
So we have evidence that traumatic effects could persist after the resurrection/healing and the mind tamper. The victim's loved ones/friends/associates will notice these, and may recognise them as PTSD symptoms following a traumatic event. If they report this to the authorities, investigation may reveal that a crime was committed. The victim may not remember the crime, but they will be realising that something isn't right.
And then there's another complication. Modify Memory might not work properly on these memories.
I'm not sure how reliable a source WebMD is, but:
With PTSD, your brain doesn't process the trauma the right way. It doesn't file the memory of the event as being in the past. The result: You feel stressed and frightened even when you know you're safe.
If the memories are garbled, stored wrongly in the brain, perhaps Modify Memory might not work on them as usual? This would be up to the GM to decide, I think. But if fragments of the memories survive, and things that bring the memory fragments to the surface trigger the victim, they (and the people they talk to) might be able to piece together a picture of what happened by looking at what the trigger factors are.
The way in which these memories are stored/accessed wrongly is discussed in this peer-reviewed article, including the following quote:
the notion that what makes memories traumatic is a failure of the central nervous system to synthesize the sensations related to the traumatic memory into an integrated semantic memory
And this one:
it has been understood that traumatic experiences can leave indelible emotional memories
Indelible may well translate to "can't be modified by magic in the same way as other memories."
Or (and this one I'm really not sure about)... if the victim is suffering the effects of trauma, and if the mechanisms for "triggers" are there but the victim's triggers have been erased... could things the victim sees and experiences in the time period after Modify Memory turn into a new set of triggers? I'm not a doctor, so I would welcome replies in comments from experts here.
Looking at other PTSD symptoms the victim may suffer, "People with PTSD have decreased brain activity in the dorsal and rostral anterior cingulate cortices and the ventromedial prefrontal cortex, areas linked to the experience and regulation of emotion."
Avoiding the mechanics/neuroscience for a second, let's also note that:
Individuals diagnosed with PTSD experience significant functional impairment, including increased risk for unemployment, disrupted relationships, and diminished physical health
The players could well be held liable for damages as a result of this.