Our Home Was Wrecked

We are dealing with a nightmare situation and my kids need help.  About 2 years ago, my kids Jill and Ben made a decision to buy a little fixer-upper in Redding, CA.  They had some money that they had inherited from their dad, Joe's passing.  So to honor their dad, Jill and Ben bought a house to make a sound investment.  They put a lot of sweat and tears into the little house to make it  shine again.  But finally it was ready to rent.  They entrusted their place with a seemingly reputable property manager, who placed a tenant without their knowing it.  He came in with cash..so they gave him the keys and a year lease.  It seemed to be going well until we got phone calls from neighbors saying the tenant was dealing drugs from the house and the house was raided by the Feds.  We called to get him evicted.  But the property management company refused to do so stating he "pays his rent on time" and we couldn't break the year lease.  The property manager at our insistence only checked on the guy once in the whole year...seeing he had broken a window and was abusing the property.  They continued to let him rent, again stating "he pays his rent on time".  In late July about a week before the lease was up, we got a shocking phone call.  A neighbor called to say the tenant had trashed Jill and Ben's house.  He broke the bedroom windows and ripped all of the interior doors off, including the door jambs.  He also spray painted the walls and dinged up the new floors.  But this wasn't the worst part...after going on the destruction jag, the tenant killed himself in the property.  At a loss as to what to do, the property manager was called.  They have refused to take any responsibility in the matter, saying "we allowed him to live at the property, and we got what we deserved".  The tenant's next of kin will not return our calls, and the insurance company won't pay on our claim either.  So the little house sits unliveable and empty, since the cleaning deposit was not even close to the damages done.  There is also the matter of the mortgage payment and utilities. The property manager is also holding our keys hostage saying we owe them money for services that they didn't fulfill.
This is an unbelievable and stressful situation.  The kids need this money to put the house back together and most likely sell, since the trauma of it all was scaring.  The estimated cost is $3000-3500 to buy 3 new windows (the previous ones are inoperable beyond repair) along with 6 new doors and hardware.  A new fence is also needed where the tenant kicked it down.  We are looking to get the repairs done prior to the winter months. 
I was so happy for Jill and Ben's purchase...but heartbroken on how it has ended. 
Thank you in advance for any help you can extend.  It would be appreciated beyond words.