MIL taking advantage now that FIL can no longer control spending, spent $19k on clothes last year

My FIL has mid stage dementia and my MIL has a long history of substance abuse and untreated mental health issues. She's been better since they moved to their retirement community but she still has her moments.

We've been taking over the finances. The FIL long ago determined that he'd never have dementia and would never need to trust anyone so you can image how fun its been untangling everything. Still, we've made good progress and have a reasonable amount of control. My wife has PoA for both her parents.

The problem - My MIL spent $19k on clothes last year. It appears that in the past two years she was able to get a number of $10k payments out of my FIL - something he would have denied in the past. She has a history of spending impulsively and running up credit cards. She takes some pride in her credit card usage despite her recklessness.

We froze the credit of both parents a year or two ago.

We're trying to figure out how to proceed. Ideally they'd both be under a conservatorship but it seems that my MIL wouldn't qualify - conservatorship law doesn't prevent willful destruction. We'll probably close her credit card but we need to brace for fallout. I'm sure she'll tell everyone that her kids are trying to take her money.

They're in an ACTS retirement community. They do a careful financial and health assessment before taking you on. They provide independent living through to memory and medical care, both of which they will need. If you run out of money, they work with you but don't kick you out - unless you've run out of money due to your own actions.

Anyway, I'm interested to hear what others have been though and how we might address this problem. Currently, we're just mulling over our options.