I don't see how you can make this statement with the information we've been given. Gifting money to grandkids is something grandparents do all the time. I did it last year, and will again this year. The POA does not obligate the sister to handle the money in the OP's best interest, just the Mom's.<snip>
You are absolutely correct, and what this is called is "mere suspicion". But the subtle signs of theft are all there; the secretiveness of the sister, refusal to discuss, the signs that the mother is being manipulated, the fact that OP said "Mom is in a different world" all strongly suggest to me that while Mom might be vaguely aware (she did sign the checks for the grandkids but did not write them) suggests that Mom is not clearly/fully aware of what is happening. This suggests that there may be financial abuse going on.
If the OP had brought what he has into our fraud office I would have opened a case on it, subpoenaed bank records, get a copy of the POA, and interviewed some people. This would establish some facts. That is not to say that definitely anything criminal or even immoral is going on. But there's enough there that it deserves a look, I think.