Okay,
I may be paranoid but my wife was recently in Chicago on a business trip and staying on the Magnificent Mile near the lake. When I awoke in the middle of the night and checked her location with the Find My iPhone App it had her 15 to 20 miles inland. Is it possible that it could be that far off or do I really need to get paranoid? Any knowledgeable replies most appreciatd
I had that problem when waiting for my husband to arrive at a hotel (edit: on Michigan Ave, as well) where we were meeting friends. Even though I saw him walking in, with his iPhone, it was putting him at a totally different location, and only later “caught up” to us.
Chicago has a lot of network issues due to the tall buildings, and even in non-skyscraper areas, there have been times and locations where I can’t get a signal at all. Tech is glitchy sometimes.
Ferret Herder probably had the right answer, but my ex-wife use to lie to me too 
I believe them to be pretty accurate, even in Chicago. A few months ago, I was in Chicago on business, on the morning I checked out of my hotel at the ritz, just off Michigan Ave, and headed to our attorney’s offices, across town. I realized that I didn’t have my iPad with me. I was worried I may have left it in the cab. I used my laptop and logged into iCloud and saw that it was at the ritz.
I’m guessing your wife was just out with some “friends”.
One of my in-laws related how he tracked his iPhone to a dumpster using the app, after he left it on the counter at a store and someone picked it up - then apparently discarded it when it started ringing and they couldn’t unlock it. Fortunately it was fairly close to the top, no diving needed. It located it within 20 feet, then they followed the ring.
The GPS on the Maps App (same idea?) will often put me a few doors down on the next block from inside my workplace. Not always accurate.
IIRC it uses cell towers and GPS so buildings, metal blockage interference, and other factors may affect the reliability.
I guess if you were checking to begin with, that’s a sign right there. Anyhow, it’s usually pretty good. But when it’s off, it can be off. I had the Apple Maps (which I assume will give the same coordinates as Find My iPhone) place me in the middle of Florida once when I was in the suburbs of Chicago. I’ve also done a lot of running with my iPhone tracking me, and once in a while, it would place a waypoint about 10 miles off from where I actually was. So anything is possible.
But if it were consistently returning the same location, especially if it tracked me moving from that location to another one in a manner that makes sense (that is, I’m not in Aurora one second and then the next second I’m on Michigan Avenue), then, yeah, I’d be a bit suspicious.
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The iPhone uses local WiFi to determine its location as it is faster than using the GPS function. I believe that it finds local wi-fi signals and sends those IDs to some database which then returns the location. There is a block in downtown Seattle that if I traverse it, my phone’s location suddenly jumps to downtown Vancouver. It is reproducible and I have gotten others to do the trick too. At some point the database will presumably be updated.
That being said, I would bet that either the IP address or a wireless modem near your wife’s location was previously used at a location west of Chicago (perhaps another hotel in a chain) and that is why the location doesn’t make sense.