It could either be a hallucination - in which your mum has actually experienced this event - or a delusion, in which case it is simply a false belief or memory which she did not actually experience at any time but believes she did.
Both hallucinations and delusions are very common in dementia - delusions more so than hallucinations, although in Lewy Body Dementia, which is one of the rarer forms, hallucinations are a key indicator of that particular disease.
Delusions may be triggered by misinterpretation of real life events: for example, reading a newspaper article, or seeing a news item or drama on television. The person is unable to distinguish fiction from reality, or applies remote events to their own personal life.
In either case, there is no point is trying to convince the person it is not 'real'. This can even result in their believing you are part of a conspiracy against them.
The only real way forward to to calm their fears, if necessary concoct a convincing story that resolves the 'problem'.
As others have said, the obvious way forward is to pretend to contact the police and then be "pleasantly suprised" to hear that the murderers have all been caught and put in jail for many years.
It may also be worth asking the GP or consultant, if there is one assigned, to re-assess, since there are medications that can reduce or eliminate both hallucinations and delusions, or at the very least, to alleviate the distress caused by them.