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I feel so bad even thinking this....I have no proof, just that my sister in law quit her job after they moved in with him. And my brother in law has bought a new truck and boat since living with him. He is on disability and he always had money trouble before.

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Are they doing caregiving for your (their) grandfather? Is he paying them for this service? That would be perfectly legitimate. If that is the case, they should have a written care agreement so that the payments won't be considered gifts if Medicaid is ever needed. And it would also answer your questions, or anyone else who questions the situation.

Can your spouse ask his/her brother to explain the situation? For example, did BIL pay cash for those purchases, or is he making monthly payments, perhaps with the money he formerly spend on housing? Don't ask questions in an accusatory way -- don't risk the relationship for perhaps nothing. But, "Gee Bro, how'd you afford a new boat and a truck in the same year? Wish I could figure out how to do that!" might be neutral enough.

How about grandpa? Can he be asked about the financial situation?

You can report suspected theft to APS, but I don't suggest that without giving BIL a chance to explain and/or without more evidence than you have.
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Thanks, I loved your answer. Since my mother in law passed my bil has changed dramatically. won't communicate with us anymore, won't even let us see grandpop. I just show up at house and kinda push my way in once or twice a week so I can see him. lol I won't ask bil. Grandpop is 92 and very confused. pleasantly confused, but confused. I don't want to upset him. he loves my bil and sil very much...I won't disturb that. I won't involve aps unless I was sure I was right. I don't begrudge them any money they are given for care. I did it alone for 2 1/2 years til they made me stop, and it wasn't easy. I didn't know at the time that I could get paid for care, or I would have. I guess I just want to make sure grandpop will have anything he needs.
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