Settlement of unprecedented lawsuit dissolves 'rescue' organizations

DES MOINES, IOWA (March 25, 2020) — Iowans who operated an alleged puppy laundering ring have agreed to dissolve their “pet rescue” non-profits, permanently cease deceptive operations, pay the state $60,000, and submit to other restrictions as part of a settlement with Iowa Attorney General Tom Miller.

AG Miller had sued two non-profit rescue groups, a commercial broker, and their officers in March 2019, alleging that they had worked together to illegally transfer hundreds of designer puppies through sham Iowa non-profit “rescues” to out-of-state pet shops. The lawsuit accused the defendants of misleading consumers about the true source of the puppies. AG Miller also alleged the defendants abused their Iowa non-profit status to circumvent state and local laws banning the sale of “puppy mill” dogs.

The attorney general’s investigation found that the two non-profits — Hobo K9 Rescue of Britt and Rescue Pets Iowa Corp. of Ottumwa — transferred at least 3,600 dogs to entities in California, Illinois, Florida, Missouri, and New Jersey from September 2016 to September 2019. They included Pomeranians, Shar-Peis, Alaskan Malamutes, Poodle-Yorkies, and other high-priced purebred and designer breeds.

The defendants denied the allegations but agreed to the consent judgment.

AG Miller’s lawsuit shined a spotlight on “puppy-laundering,” the practice of using sham non-profit “rescue” groups to obscure the source of puppies. In some cases, puppy-laundering can hide the identities of breeders who may have animal-welfare violations or other problems they wish to keep hidden from consumers seeking a puppy. With increasing consumer and government scrutiny into puppy mills, AG Miller is concerned that others will engage in puppy-laundering to continue lucrative pet sales.

“This case was the first of its kind brought by any state attorney general, and this settlement will ensure the defendants never again attempt to evade ‘puppy mill’ bans,” AG Miller said. “This outcome should send a strong message to others who are thinking about engaging in similar fraudulent activities in Iowa.”

The attorney general’s investigation uncovered that Pet Luv, a pet store in Chicago, acquired about 765 purebred and designer puppies from Hobo K9 and sold them for more than $1.1 million between 2016 and November 2018. Pet Luv’s written “puppy guarantees” provided to its customers claimed that the “breeder” of these dogs was “Hobo K9 Rescue” — not the actual for-profit breeders from whom Hobo K9 brokered the puppies. Pet Luv sold most of the dogs — which included Yorkshire terriers, Teddy Bears, Bichon Frises, and German shepherds — for more than $1,000 each. Another Chicago pet store that sourced its puppies from Hobo K9 “adopted” a “rescue” goldendoodle puppy to a customer for $3,600.

Experts warn that most legitimate rescues rarely charge anywhere near $1,000 for dogs and the majority of dogs available for adoption are not purebred and designer breeds.

“Legitimate rescue groups have told us the activities of these sham non-profits discredited and demeaned the good work that they do,” Miller said.

 In addition to Hobo K9 Rescue and Rescue Pets, the lawsuit named as defendants:

  • JAK’s Puppies, a for-profit puppy broker based in Britt;

  • Jolyn D Noethe of Britt, co-owner of J.A.K.,’s Puppies and co-president and director of Hobo K9 Rescue;

  • Kimberly K Dolphin of Britt, co-owner of J.A.K.’s Puppies and treasurer of Hobo K9 Rescue; and

  • Russell A Kirk of Ottumwa, president, secretary, treasurer and director of Rescue Pets Iowa.

The defendants were officers in both the non-profit Hobo K9 and the for-profit JAK’s, thus “it appears they must claim to ‘rescue’ puppies from themselves — or from the for-profit puppy mill industry in which they participate,” AG Miller’s lawsuit alleged. “The Defendants’ funneling of money between [their] non-profit and for-profit entities further underscores the inherently for-profit nature of their fraudulent puppy laundering operations.”

Under the terms of the consent judgment:

  • Hobo K9 Rescue and Rescue Pets Iowa Corp. are permanently dissolved, and the defendants and others connected with them are forbidden from reorganizing them.

  • The defendants must refrain from transferring any dogs “while having knowledge that the purpose of the transfer is to evade local or state restrictions on the sale of commercially-bred dogs.” The defendants can, however, transfer dogs to “bona-fide rescue non-profits for purposes of non-profit adoption and the avoidance of euthanasia.”

  • The defendants must provide a quarterly report to the attorney general for three years, which documents all the animals they transfer, sell, or donate, and the destination of the animals to ensure they comply with the settlement.

  • The defendants must pay $60,000 to the state’s Consumer Education and Litigation Fund. (The maximum civil penalty per course of conduct violating the Iowa Consumer Fraud Act is $40,000).

  • For three years, Noethe, Dolphin and Kirk are prohibited from organizing any new non-profit corporations; from serving as an officer or director of any animal non-profit; or from serving together on the board of an animal non-profit. They cannot serve as a board member of any animal non-profit for one year.

The consent judgment does not prevent consumers or other governmental entities from taking further action against the defendants.

Is it really a rescue dog?

The practices of the non-profits named in the Iowa AG’s lawsuit allegedly differ markedly from those of typical rescue groups. In an affidavit filed with the lawsuit, Tom Colvin, the CEO of the Animal Rescue League of Iowa, said legitimate canine rescues generally:

  • Do not expend the time and resources necessary to transport dogs to new owners hundreds of miles away to make profits;

  • Primarily offer older dogs, not designer and pure-bred puppies not in need of shelter, care and adoption;

  • Do not expend the time and resources necessary to provide “pedigrees” to new owners;

  • Spay or neuter dogs to prevent for-profit breeding;

  • Accept donations from the public to offset the costs of their work and to fund programs to reduce the number of animals being surrendered;

  • Charge minimal fees associated with shots and other essentials. “In no event would dogs from legitimate rescues within Iowa be consistently transferred to new owners for fees of any kind more than $1,000,” Colvin said.

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