Yeah, those wheels (or spacers) caused the problem. I don't think it was a lug nut issue since it appears that the brake rotor was still attached. So most likely what happened was that the wheels with the very wrong offset overstressed the bearings and the axle failed. There are a few guys around town who have those stupid looking wheels on their trucks. The wheels stick out 4 or 5 inches from the correct location which puts a huge amount of stress on the wheel bearings. Tire shops should know better than this but some of it could be self installed by guys buying rims on-line and just bolting them on at home.