No, they will not be subject to criminal prosecution. Even assuming that your wife is non-exempt, this is civil law, not criminal law.

IF your wife is exempt (not likely but possible) then nothing illegal is transpiring. Exempt employees are not paid on the basis of the hours they work; they are paid a salary that covers all hours worked, regardless of how many or how few. They are never, EVER due additional salary for extra hours work under the law. Clocking out before she is finished working would only be an issue if she were denied participation in an hours-based benefit such as FMLA or a 401k.

If your wife is non-exempt, (likely but not definite) then there are laws being broken, but as I said above they are civil laws, not criminal laws. If this is the case, then the employer is responsible for keeping an accurate record of the hours worked, and she must be paid overtime for all hours in a week over 40. She should contact the state DOL for assistance in this case.

In neither instance are lunch breaks an issue. Unless she is a member of a union that requires them (in which case her recourse is through the union, not through the law) lunch breaks are not required by either Federal or Indiana law regardless of how many hours she works.