How to deal witha loved ones dementia paranoia?

Medication will help with your moms paranoia and her aggressive tendencies she's showing.
Please contact her doctor.

Hi! Your profile describes many more problems with your M than ‘moderate dementia’. In a facility, the “combative, pinching and scratching the caregivers” problems would probably lead to sedative drugs to keep everyone safe. The drugs would potentially help with the paranoia and delusions as well, particularly if they are distressing her as well as you. Could you talk to her doctor about this option?

No, you don't validate paranoid thinking. When someone accuses someone wrongfully of assault and stealing you tell them gently that this didn't happen and that their minds are playing tricks on them due to having some dementia. They won't of course believe you, but you NEVER validate wrong ideas.
You don't ARGUE with people with dementia, because it does not good. So there is no back and forth. You simply tell them that this didn't happen to them, but that their thinking it did is a sort of realistic dream for them. Then leave it be if they go on and on. There is no "Yes he did" and "No he didn't". You can merely respond "I am sorry that you think that" and then deflect attention and move on. If thinking becomes obsessive there isn't a lot you can do.

She may require medication and evaluation by medical personnel if the pinching and etc keeps on.

But again, you do not validate wrong accusations.
And again, it is very common for there to be hallucinations and paranoid thinking.
And again, you cannot convince someone with paranoia of anything. That still doesn't mean you "validate" wrong accusations.
Just deflect and move on.
Watch a lot of Teepa Snow videos. It will be helpful.