I'm so sorry this happened to you.
This has ALL the hallmarks of a scam.
The scam works because the unwitting victim (ie: you) really, REALLY want the product (ie: the horse) and because you want this SO BADLY, you ignored all the warning signs before getting into this deal.
You found the horse of your dreams at a discounted price....did not go in person to investigate....allowed the seller to handle all the vet checks...allowed the seller to make all kinds of promises until she had your money...
and now *poof* the seller and the magical horse are essentially gone...with no way to contact them....no way to prove that the sale was legal (what with all the paperwork in various other names)...
For all you know...this scammer was trading on the name or impersonating the reputable seller that you THOUGHT you were buying from.
Your lawyer is right. Sue for your money back - IF you can even prove your case against this scammer - and then go buy a REAL horse....that you personally view and have your vet inspect.
Leasing a spoiled rotten trail horse...pretty - but a brat!