I tried looking into the details of the account to see if I could maybe just split the money in half and put it into two separate accounts for each of them. The problem is that now that my 1st niece is an adult I legally have no control over the money and I can get in trouble for not giving her the money.
Are you sure on this? How is the account set up? Usually a college fund is set up where either the parent or some other adult's name is on it for the benefit of a certain child (not sure of the exact legal name). That is how my daughters' accounts are set up. So they never actually touch it - when I pay for college I take a withdrawal from their account and use that to pay for it. I also can transfer one account into the other child's account. They are both over 18. But mine is a 529 and it is supposed to strictly be used for college expenses.
Is the account set up to pay for college? If this other niece is no longer in college then what would it benefit her any way?
It is honestly hard to know unless I know what sort of plan or account you have. To be honest I am not familiar with other college plans.
Other than that I am not sure what you can do - I agree that you should be in no legal obligation to provide either child money for college or have to take the heat from any family members as a result.
Could you reach out to the parents and explain what occurred? Maybe the parents are in a position to mediate this and spread the wealth between the two.
My last thought is if none of this will work - can you keep this hidden? I am guessing you no longer are providing any money in the account. You could stop that one and start a new one for your other niece and slowly accumulate money in it for her. When they are about equal in value - you could then give it as a gift say - when they get married or buy a house or have a child.
I would not sell your things - they are yours - the parents should be paying for their children's college --- it was a very kind but unnecessary thing you did.