No, what you describe would not be legal on one, possible two grounds:1) A power of attorney (or will, for that matter) created by someone not mentally competent when they created it is not valid. So if your grandmother, whom you write had developing dementia, can be shown to not have been mentally competent when she gave your aunt the POA, the POA would not be valid; and if it were valid, then anything she did pursuant to it is not legal.2) Even if the POA were valid, the attorney-in-fact or agent (those are the terms used for the person given power by a POA) has a "fiduciary duty," or law-imposed obligation, to act loyally to and in the best interests of her principal, the person giving her the power. Taking the principal's money for herself would be a clear violation of that and again illegal.If you are primarily interest in justice, not getting the money back, try contacting the Attorney General's Office for the state where your grandmother lives and also adult protectiive services in that state.