Calling all MOMS!

Okay, I need some motherly advice. Working as a school principal, I am usually the one giving advice, but this time, I am asking for your comments. We have had this little girl living two houses away in our circle for about 2 years. From the very first month she moved in we have had trouble with her. To make a long story short, she is a very manipulative girl who seldom has to face the consequences of her actions. Her mother, is the type of personality that believes every word coming out of her child's mouth, even though she routinely lies. There is an excuse for everything she does. The examples of this behavior are numerous, So I will just give you a few examples. She wanted a scooter like the girls, so she kept taking their scooter. Her parents finally bought her one of her own, but she refused to ride it because it wasn't just like the girls. They eventually bought her another one, exactly like the girls. She wanted clogs like the girls, so every time they went to her house, their shoes would disappear. One time when we went to the house to get them, the parents said they searched everywhere in the house and that she never had them on when she went over. We found them after dark on the sidewalk in front of our house. mind you, they were not there before. Madison had lost a tooth and was wearing it around her neck in a tooth necklace we give out at school. This little girl really wanted to see the tooth, so Madison let her hold it. She then took the tooth and hid it in her drawer in her room and told Madison that it was lost. Madison began crying and told the little girls mom. The mom asked the little girl about the tooth and she denied everything. Seeing how upset Madison was, she apparently threatened her daughter that she would pull out her tooth and give it to Madison unless she found the tooth. Miraculously, the tooth appeared. Last Spring, I came home from work and was met at my car door by this little girls mother. She told me that Madison had bit herself and was blaming her daughter, but ALL the kids in the neighborhood saw her do it. I told her I needed to talk to my daughter and then I would talk to her. I walked up on my porch and Madison had this big bite mark with teeth imprints in her arm. She was upset about the bite, but was more upset about this little girl and her mother lying about what had happened. I talked with her and got the whole story. I then talked with a few of the other neighbor kids, and nobody had seen Madison bite herself. Looking at the way the teeth marks were on her arm, I KNEW she didn't bit herself. I took Madison and Chris down to their house and calmly tried to talk to the parents. Well, their immaturity showed and they kept rolling their eyes at me and sticking to their story. I know we were getting nowhere, so I just instructed my kids to stay away from this little girl and her parents. Well, this mother proceeded to tell this story to anybody who would listen. Ironically, about 2 weeks later I had them both on my porch apologizing. Once for the little girl lying, and second for biting Madison. She then asked if my girls could please play with her daughter. I have allowed the girls to play with her supervised in the yard, but now that brings me to the final example. Last weekend the girls were our riding their motorcycles. They were giving this little girl rides around the circle. They were sitting on the porch while the other one was riding. Madison had her Nintendo DS and they were playing it. Well, come Monday morning it was MISSING! The girls thought they lost it somewhere in the house, but their friend told them they saw this little girl playing with it. Meg remembered this too. Well, our neighbor remembered how Madison's DS was lost and brought this note to our house that they found taped to the slide at the park. Somebody had found a DS left at the park by our circle. My girls were NEVER at the park this week, but somebody else was! She took the DS, played it all week, I am sure in front of her parents, left it at the park, and of course, when we talk to her tomorrow, will deny the whole thing. I have tried to allow my kids to play with her, but when is enough ENOUGH! I know that my kids are not perfect, and they definitely have faults and make mistakes, but this is getting OUT OF CONTROL. Chris is sooooooo mad. He has told the girls they are DONE with playing with her. Working with kids, I know the damage this can cause kids when nobody is allowed to play with them, but how many times do I let her take advantage, lie, and hurt my kids? So, leave me a comment with your advice. THANKS