Your wife needs to plead her case to the boss that this woman is creating a hostile work environment. Document everything and present it to the old man. If he's not willing to do anything then she can sue. She needs to nip this in the butt immediately or it will get worse!
I'm not sure what state you're in, but you can google search for hostile workplace.
http://www.california-employment-lawyers.com/hostileWorkplace.shtml
I'm going thru far worse with my Sup
Pornographic material on Sup's company computor
Verbal & physical threats of subordinates & coworkers
Fraudulent hiring practices
Wrongful denial of vacation
Wrongful termination of employee
This should motivate your wife, she was awarded a total of $600K.
http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=9th&navby=case&no=9815072