Accused of theft and fired?

My mother-in-law was accused of theft by the manager of the store (who accused her and one other only AFTER she herself was caught in the act). So, the owners fired the manager and all the people the manager accused. Basically, the manager was using the employee id numbers of my mother-in-law and the other girl, to special order things and pay less than cost for them. Since she was the manager, she had access to every employee's id number and password. The manager was caught in the act (paying less than cost on wedding supplies for her upcoming wedding). The only items they found that this happened with was wedding stuff. Basically, I'm sure my mother-in-law was not involved and now she's afraid to use the store as a reference. We are in an at will employing state so they were in their rights to let her go, but can they accuse her of theft without proof when she applies for other jobs? Should she just not use them as a reference at all? How would she explain the employment gap

I don't know if this is applicable, but this is what I'd do in her shoes (assuming she is, as you say, innocent).

I'd get a lawyer, one who specialized in prosecuting defamation of character (slander, libel), and have him contact the former employer on my behalf. The goal would be a negotiated agreement with the store owner. The approach would be that I'd agree they had a right to terminate my employment just on suspicion, but that claiming to a prospective employer that I had committed a crime without proof unfairly limited my employment chances and cost me lost wages, which they should be responsible for. If the owners agree to limit their comments on my performance to the work I actually did for them and not make any allegations of theft to my prospective employers, I'd agree to hold them harmless for their comments.

I'd then let my lawyer earn what I was paying him, and take his advice regarding just what my expectations about this situation would be.