We think they are broke and do not have any of the money left. We do not have money enough to hire an attorney to try to get it back. We have now added his son to the father-in-law's checking account. we also have gotten a Durable Power of Attorney. How do we stop a caregiver that is being paid well from receiving or asking for other compensations from him. He thinks he can buy their love.
If this is a PAID caregiver, you report it as INCOME to them and let them explain to the IRS where the taxes on the money went. You state that it was a payment to the paid person as an independent contractor and they are responsible for all taxes associated with it. If it's a family member, have that discussion before you do anything. Just make sure you have documentation that you actually had a transfer happen to the individual. The "gift" will be held against the elder as a transfer within Medicaid 5-year lookback and could disqualify the elder for benefits.
You can report such persons if you feel they have taken advantage -- "elder abuse" to the police but you must have documented proof. They can give you guidance and there may be an attorney or first yr law persons, etc. willing to take the case for you and recoup some of dad's money.
Your first step is to secure dad's wealth, finances so that you can monitor his transactions and be alert to unusual withdrawals, etc.
First, what are your father's impairments? Does he have mobility issues? Vision problems? Dementia or other mental health issues? Your profile says he has general age-related decline. That would not be grounds for taking over his finances as POA and it would not be grounds for becoming his guardian.
As long as your father is not declared incompetent to handle his own affairs by a court, he can loan money or give money away to anyone he wishes to. You can try to influence his behavior, of course, and perhaps you should, but unless he is incompetent, I don't think you can force your decisions upon him.
(It is REALLY frustrating to see a loved one make decisions against their own best interests, isn't it? I am so sorry you are facing this.)
If you feel someone is taking advantage of your father and exploiting him, and you have evidence, you may want to involve the Adult Protection Services in his county.
Since your father-in-law has memory issues, I guess when the money was borrowed by the caregiver, that a promissory note wasn't drawn up. Who was the father-in-law's financial POA prior to watch over his financials?
Why not call up the caregiving Agency and tell them what you suspect but you have to have 100% proof that money was loaned and it won't be paid back. Agencies are licensed, bonded and insured.