Grace O'Toole, 24, turned herself in to police Saturday, accompanied by her lawyer, the New York Post reported Sunday.
O'Toole, who is accused of running the day-to-day operations of Wicked Models, was charged with promoting prostitution, a Class D felony, police said.
Annette Derose, whose son Christopher is engaged to O'Toole, said she was shocked by the arrest.
"Whatever she did, that's her business, but it's like, whoa, never in my wildest dreams," she told the newspaper.
Derose said her son is a U.S. Marine on his second tour in Iraq. She said he too was likely unaware of his fiancee's alleged business and O'Toole would not tell him of her alleged activities.
"Maybe she was keeping it from him, too," she said. "If he knew that, I don't think he would be with her -- because he's a one-girl man," she said.