Nonprofit raises concerns that Iowa regulators are facilitating ‘puppy laundering’

State and federal regulators don’t track where breeders are shipping animals

By: - August 18, 2022 2:59 pm

This beagle was allegedly offered for sale in a California store that claimed it was sourced from Bark Adoptions. The entity may have had custody of the dog for only a few hours after acquiring it from Rescue Pets Iowa and JAK’s. The Iowa companies stand accused of routing puppy mill dogs to California where they could be sold as “rescue” puppies. (Photo from U.S. District Court exhibits.)

An Iowa state agency is charging a nonprofit group $225 to offset the expense of searching for puppy-mill records the agency now admits it doesn’t maintain.

The nonprofit group that has been invoiced for that expense objects to paying the state to look for nonexistent records. But the group says its bigger concern is that the state should have those records in hand and be using them to prevent the illegal sale of animals to out-of-state retailers.

In late June, Mindi Callison of the Iowa-based animal welfare organization Bailing Out Benji filed a formal Open Records Law request with the Iowa Department of Agriculture and Land Stewardship, seeking access to all 2021-22 government forms that one Iowa dog breeder, Steve Kruse of West Point, had filled out showing where he was shipping his dogs.

In response, the department estimated it would take 8.75 hours, at $25 an hour, to search for the documents, which would add to up $218.75 in costs. The agency said that “after the request has been completed,” Callison would be mailed an invoice for the expense, and that once payment was received, she’d receive an email with a link to a Dropbox account where she could access the records in question.

Callison approved the estimate. Two weeks later, IDALS informed her the search for the records was completed and sent her an invoice for $225 for nine hours of searching – although the agency provided no records.

When asked for an explanation, IDALS Administrative Assistant Jamie Carter told Callison that IDALS didn’t maintain any such records, noting that while breeders are required to complete and keep records of their sales pursuant to federal regulations, IDALS doesn’t collect copies of those documents.

Callison says she’s frustrated the department charged her $225 for look for records that, by policy, it doesn’t keep. But the larger issue, for her, is the fact that IDALS isn’t tracking where Iowa-based breeders are sending the dogs they sell.

Last year, Callison contacted the U.S. Department of Agriculture in an attempt to collect copies of similar records tied to a different Iowa breeder, JAKS Puppies in Britt. She ran into the same issue there, with the USDA explaining that it while it requires breeders to complete the forms, the USDA doesn’t collect or maintain them. In that case, however, the USDA didn’t charge Callison a fee for a document search.

‘His animals seemingly go nowhere.’

Callison says the lack of recordkeeping by both the federal and state government represents “a giant loophole” in the regulatory system. She says that loophole is facilitating a national puppy-laundering scheme in which breeders produce puppies that are falsely labeled as “rescues” to boost sales.

The failure to maintain records that show where the animals originate and where they are sent means that animal-welfare groups can’t hold such breeders – or their governmental overseers – accountable for such transactions, Callison says.

“Neither our state nor the USDA keeps any type of documents showing where the animals are going within states,” Callison says. She says Kruse is one of the largest commercial dog-breeding kennels in the nation “but his animals seemingly go nowhere.”

She notes that while documentation is required when animals move across state lines, no one in Iowa is using those documents to track where the animals are going. Federal records show that some were sold to Daniel Gingerich, the former Wayne County breeder who was shut down by federal officials last year, she said.

“The state and USDA allowed Kruse to take sick and emaciated dogs back from Daniel Gingerich after (Kruse) sold the dogs to that facility in the first place, while Kruse has a history of not taking care of his animals,” Callison said, referencing USDA reports of past violations. In December 2015, Kruse received a 21-day USDA license suspension after throwing a bag containing two dead puppies at a USDA inspector.

The Iowa Capital Dispatch was unable to reach Kruse for comment.

“The largest breeders and brokers in our state are able to secretly sell puppies to each other,” Callison said, “without any oversight and then funnel those sales through in-state brokers before they cross state lines.”

That process, she said, allows breeders with a history of violations to circumvent a growing number of state and municipal laws that are intended to prevent pet stores from acquiring puppies and dogs that originate from breeders who are repeat offenders.

When asked about the $225 fee charged to Bailing Out Benji and IDAL’s recordkeeping practices, department spokesman Don McDowell said the agency would look into those issues next week.

Iowa attorney general sues over ‘puppy laundering’

In 2019, Iowa Attorney General Tom Miller sued two nonprofits and a commercial broker, accusing them of illegally transferring hundreds of commercially produced puppies through phony nonprofit “rescue organizations” that, in turn, sold the dogs to out-of-state retailers.

JAKS Puppies and the two self-proclaimed nonprofits — Hobo K9 Rescue of Britt and Rescue Pets Iowa Corp. of Ottumwa — transferred at least 3,600 dogs to New Jersey, Florida, California, Illinois and Missouri and over a three-year period, Miller alleged. By routing the dogs through the phony nonprofits, breeders were able to successfully circumvent laws banning the sale of dogs from puppy mills, Miller charged.

Pet Luv, a Chicago retailer, had acquired about 765 puppies from Hobo K9 and sold them for more than $1.1 million. The store’s written “puppy guarantees” to customers claimed that the dogs originated from Hobo K9 Rescue, not the for-profit breeders from whom Hobo K9 brokered the puppies. Pet Luv sold most of the dogs for more than $1,000 each.

Evidence of the alleged puppy-laundering scheme included the fact that Jolyn Noethe, a co-owner of JAK’s, was also co-president of Hobo K9 Rescue, and Kimberly Dolphin, another JAK’s co-owner, was the treasurer of Hobo K9 Rescue.

Along with Russell A. Kirk, president of Rescue Pets Iowa, Noethe and Dolphin agreed to a settlement that required them to dissolve their nonprofits and pay the state $60,000.

At the time, Miller expressed concern that with an increasing number of states and cities banning the sale of dogs from puppy mills, other unscrupulous breeders might engage in “puppy laundering” to maintain sales.

Iowa is home to many of the nation’s biggest puppy mills. During the second quarter of 2022, a total of 23 Iowa breeders and brokers were cited for regulatory violations by the USDA — the highest number of violators of any state in the nation. Missouri came in a distant second place for the number of violators, at 13.

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Clark Kauffman
Clark Kauffman

Deputy Editor Clark Kauffman has worked during the past 30 years as both an investigative reporter and editorial writer at two of Iowa’s largest newspapers, the Des Moines Register and the Quad-City Times. He has won numerous state and national awards for reporting and editorial writing. His 2004 series on prosecutorial misconduct in Iowa was named a finalist for the Pulitzer Prize for Investigative Reporting. From October 2018 through November 2019, Kauffman was an assistant ombudsman for the Iowa Office of Ombudsman, an agency that investigates citizens’ complaints of wrongdoing within state and local government agencies.

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