The state's seven-count lawsuit, filed in State Superior Court in Essex County, alleges that NJ Horse Angels and its two trustees, Sharon Catalano-Crumb and Frank Wikoff, used internet social networking sites to raise about $US145,132 from donors between September, 2009, and September, 2010.
An investigation found that at least $US61,422 in donations were misappropriated by Catalano-Crumb and used by her for trips to Atlantic City casinos, personal shopping, meals, pre-paid phone cards and cash withdrawals.
She allegedly bought jewellery for Wikoff, who is her boyfriend and a convicted felon, and also sent cash to her son who is serving a life sentence at Trenton State Prison.
The investigation continues, with $US9000 still unaccounted for, the agency says.
NJ Horse Angels was based in Phillipsburg, New Jersey, where Catalano-Crumb, 54, and Wikoff, 55, live. The pair are accused of multiple violations of the state's Charitable Registration and Investigation Act.
The lawsuit seeks restitution for donors, closure of NJ Horse Angels and the barring of Catalano-Crumb and Wikoff from working for any charitable organisation in New Jersey.
Civil penalties are also sought.
"We allege that these defendants defrauded donors for their own personal enrichment," attorney general Dow said.
"It's unfortunate that animal lovers and other well-meaning donors fell victim to a con woman who used horse photos and sob stories posted online to tug at their hearts and to open their wallets."
NJ Horse Angels operated under several different names, including NJ Horse Angels Rescue, NJ Killpen Horses, Horse Angels of Facebook, Camelot Auction Horse Angels, and The Forgotten Angels.
The common claim, according to authorities, was that horses intended to be sold and sent to slaughterhouses for processing into pet food would be saved and then cared for by NJ Horse Angels through donations.
NJ Horse Angels had more than 4900 registered friends on one social networking website.
The investigation found that Catalano-Crumb mixed donations in her personal bank account.
The investigation confirmed that some of the donations were used to rescue, transport and care for horses.
"This case illustrates how con artists can use sad stories and photos posted on social networking sites to defraud donors," said Calcagni, acting head of the division that carried out the inquiry.
"Our Charities Registration Unit is a resource that consumers can use to steer clear of individuals who mask their scams under the pretence of being a charity."
Calcagni noted that registered charitable organisations are required to file annual financial disclosures with the Division of Consumer Affairs.
Deputy attorneys general Anna Lascurain, who heads the Securities Fraud Prosecution Section, and Elizabeth Lash represent the state in the case. Volunteer attorney Aris Dutka is assisting.
Investigator Patrick Mullan carried out the inquiry.