What can you do when you have proof that someone has conned a woman out of thousands of dollars knowing she had the beginnings of dementia?

I'm a little confused. Are you trying to apply her for Medicaid? If she is already on Medicaid this apparently wasn't a concern for the State. If she is wealthy and is self paying the nursing home I don't see why you can't afford an attorney. At any rate it doesn't seem clear that there was any wrongdoing and it would be difficult to prove the elderly lady didn't give the money willingly. The police would likely tell you the same thing

I would go to the police.

1.  Local police department, or state police.      They'd have to handle any prosecutorial action.   And they may know of specific Elder Fraud Task Forces.

a.   The first 2 and last categories in the following link can also help in narrowing the specific charges, as well as options, for elder abuse.  (Being well prepared will help working with law enforcement.)

https://www.justice.gov/elderjustice/elder-justice-statutes-0#SL1

b.   Ask about statute of limitations for the potential charges, which may vary with charge (cf. misdemeanor vs. felony, with possible enhancement b/c of an elder being the victim).   (How recent was the $50K loan?)

https://ncea.acl.gov/What-We-Do/Policy/State-Laws.aspx

2.  Check with your state (or law enforcement - see no. 1) to see if there are any special task forces to deal with elder fraud/abuse.    My state has an Elder Law Agency with limited free advice for income qualified elders.    Given that you're obtaining advice on behalf of someone who would qualify, if your state has one, you should be able to get some guidance on pursuit of elder fraud, specific to your state. 

3.   Check with AARP; I have a vague recollection that elder fraud help/advice is available on a national level, with guidelines for local areas.   Some states also have AARP reps to help out.

4.   Search for elder law firms in your area, check their websites and see if they've posted articles on elder fraud.  In my area, some of the law firms do that.   They also exhibit at Area Agency on Aging expos (in October in my area), and there are always elder law firms exhibiting and handing out free articles.

It's also typical that firms will give out chits for a free hour consultation.   You could perhaps get consultations from all firms represented - 2 - 3 free hours of consultation would help in gathering evidence and working with law enforcement.

5.  You state someone knew she had early dementia.   How can you prove this?   Unless you can, it's hard to claim that that knowledge existed.   Did you personally speak with this individual and alert him/her to the presence of early dementia?   Unfortunately, lacking specific evidence could make "knowledge of dementia" difficult to prove.

But that doesn't vitiate the fact that apparently $50K was loaned.  

6.  The paperwork on the $50K loan is critical.    Was there a promissory note?  How did she provide this money?  Checks?   I assume you have documentation?  Was any of it paid back, and if so, how much?

Is the recipient individual still in the local area, or has he/she skipped town?
Is that same individual in contact with your friend at her current residence?   If so, you might consider raising the issue of barring him from visiting her.   That isn't easy to do, unless all visitors are checked in at a central location.   But do speak with the admins to alert them to the possibility.


Questions: 

1.    I'm uncertain about the nature of the checks "written out to her and signed by the person but none were dated."   This would infer that someone for whatever reason apparently considered giving her money.   Do you have any more information on this?    It could suggest someone was paying her back.

2.     Another question is the account of the individual who signed the checks.  Do you have information on the bank account of that individual?   Was it the same one to whom she loaned the $50K?

If you are her POA and you need help in managing her estate FOR HER, then the attorney is paid from her estate. If there is no estate left, that is to say if she has no funds, then she is at the mercy of the state, and any lookback is going to go badly for medicaid if there are these checks and withdrawals. You say "we" and add a plural for the POA as in there is more than one. I think this needs to be put into the lap of an attorney. This fraud may have been done by people long gone. And even if there, you will have little standing in any of this. You badly need guidance now. It is sounding like you are up against a mess you may not feel qualified to handle; I can only suggest if that is the case, and if there is any estate at all here that needs action/protection, there may need to be a court appointed guardian. You say she is "like" a relative, but she isn't a relative. Without standing as a relative, and without any real knowledge of what to do about this, you are a fish out of water. It is in her best interest that someone handles this complicated mess for her. See a Lawyer.