You need to do that to her especially if she has a history of this behavior...My mom and I just got through dealing with this with my brother...You can't provide safe haven for family members...they need to hit rock bottom to learn and by not reporting her illegal actions you are part of the problem and helping her codependent behavior.
Also call your bank and report it as stolen and that the charges are fraudulent ones...they should block the card, investigate and be sure to be honest and explain the situation to them. I have dealt with similar issues with both banks ive belonged to over the years. (Bank of America and M&T Bank)