Based on your comments to Kate Bunting’s answer, it appears that your question isn’t asking about “in lieu of” in isolation, but its function in the presence of “or” within the original context. This answer addresses that aspect of your question, leaving the discussion of “in lieu of” to Kate Bunting’s answer.
Your quote sets up a choice between a ‘time in jail’ penalty and a monetary penalty.
The word “or” in the quote distinguishes between two forms of monetary penalty, one of which is called a bond and the other, bail.
The quote says that the ‘time in jail’ option was imposed instead of either monetary penalty.