Need to apply for Medicaid for Mom. Will they penalize her for no longer having money to pay for her nursing home?

Make sure you have a police report for the scamming incident otherwise it will look suspicious to medicaid. They will questions anything when money is of concern.

VKay, as long as it was reported as a scam, my understanding is that this will not look like "gifting".

Yes, to local and federal

There is such a thing as a Medicaid Planner. Medicaid rules vary by state and this person can help you understand what Medicaid is and does and how to prepare so your mom is most likely to successfully qualify for it.

Did you report the scam to law enforcement?