Sounds like she's liable for damages caused, you should inform the neighbors, it'd be the right thing to do. Maybe she'll listen to a magistrate before she ends up killing people.
You're aware she's breaking the law and operating a system which potentially threatens the lives of people, you're 100% required to report this to authorities especially so if she ignores you and continues using it, you'll be held accountable if someone gets hurt and she admits to authority you told her, means you're aware of what's going on. Sorry the situation sucks but it'll turn into a full blown life destroying nightmare for you personally if something goes very wrong.