Dang it! I just typed a whole update but it didn't post... grrr....
Anyway, I spoke to Apple who indicated that I should change, not just her apple ID password (which I did last night) but also the email address associated to her Apple ID. Apple feels this is the link that is causing us to see these iMessages as it is present somewhere still on her old device.
I haven't yet done this because, if it's true, we will no longer receive messages from the person in possession of the phone.
Apple also indicated that it is very likely that whoever is on the other side of these iMessages is in possession of the device.
For those wondering -- Find my iPhone does not locate this phone. I've tried from my phone and from my computer. I'm pretty sure that once the phone is wiped (as this one has been) Find my iPhone is useless. What is linking us to these iMessages is either her Apple ID, as Apple has stated, or her phone number that the SIM card in the old phone is still associated to on Apples iMessage servers.
It's my understanding that it could be the phone number since that goes with the sim card. When the phone was in her possession and set up for her number, she used iMessage. Then, on Apples end it associated her Apple ID, iMessage, (facetime for that matter), to her phone number. Now that iMessage is being used by a different person, but with the same sim card, apple is routing it to her CURRENT phone as her current phone has her same phone number/apple ID set up on it. I don't know how factual the above is, I'm just summarizing what I've read online.
Regardless, we're not sure what to do. If it is her Apple ID that is the link, then it seems as if her Apple ID is set up and showing on the OLD phone somewhere. Unfortunately for us, her apple ID (the email address) contains personally identifiable info (i.e. her name). SO -- we don't know if we want to pursue trying to get this phone back because we don't know who has it and/or how PO'd they would be about us re-claiming it. If mad enough, and armed with her name, they can easily find out what she looks like and where we live (her picture is on her work website).
I haven't contacted the local police because a) I'm not in town currently and b) I'm not sure that this situation as it stands proves enough evidence for them to pursue finding the person.
If the person in possession is the person who took it, we may know where he/she works.
Also, I don't know the IMEI or whatever Verizon used to blacklist the device as it's on the original box which is at my house and I'm not currently at home, otherwise I would look it up and see if it's still blacklisted in their system and if not, see what they can do about it.
Another option is to simply text the person anonymously and let them know they may be in possession of a lost/stolen iPhone and to take it to the police department or work out a deal where we can buy it back from them.
I'm not sure what to do. This is very frustrating!