There are approximately 1,100 licensed class B dealers, but the USDA claims that only approximately fifty run businesses that primarily supply random source animals directly to research facilities.
According to USDA regulations, class B dealers must obtain their animals from animal regulation facilities (pounds), other dealers, or private individuals who have bred and raised the animals themselves. Class B dealers can then legally resell unlimited numbers of these animals to research facilities. Prices are usually based upon the demand and the availability of a particular breed. Dogs sell from $150 to $700 and cats from $50 to $200.
Financial information about Federal licensees is considered confidential and is therefore nearly impossible for the public to obtain and verify. In rare instances, financial information becomes available through legal proceedings arising from violations of the Animal Welfare Act. For example, although court documents state that Jack D. Stowers of Indiana claimed he makes no more than $25,000 per year, those same documents reveal that he earned an average of $130,000 per year from 1988 through 1996 for a total of over a million dollars. Hodgins Kennels in Michigan, officially listed by the USDA as not even in the top fifteen suppliers to research in terms of total dogs and cats sold, earned nearly half a million dollars in 1994 alone. Some dealers, such as C.C. Baird in Arkansas, are listed by the USDA as selling four times more animals than Hodgins Kennels. Baird is well known locally for being a millionaire from his sale of random source dogs and cats to research facilities across the country.
Since many of these dogs and cats were at one time household pets, it is impossible to visually distinguish between animals which were obtained legally for research and pets which were stolen. The evidence is clear, even to members of the United States Congress, that many of these "random source" animals have been acquired illegally through theft and fraud.
Congressmember George Brown (D-CA), a strong supporter of the Animal Welfare Act, wrote to the Secretary of Agriculture in 1993 complaining that, "Credible evidence has come forth that USDA licensed animal dealers routinely buy and sell stolen family pets." He echoed that sentiment in a hearing held on August 1, 1996 before the House Agriculture Subcommittee on Livestock, Dairy and Poultry. In this hearing, held to evaluate proposed legislation to prohibit class B dealers from selling dogs and cats to research facilities, Brown stated that, "Pet theft is an ongoing national scandal... Despite the fact that laws prohibiting the dealing in, and sale of, stolen pets have been on the books for 30 years, pet theft has continued to flourish and has become a profitable business..."
In the same hearing, Rep. Charles Canady (R-FL) stated that, "There is significant evidence to support the conclusion that individuals who are currently in the business of providing cats and dogs for medical research purposes have been furthering their own interest by theft of the animals from their rightful owners." Congressmen Jon D. Fox (R-PA) and Tom Lantos (D-CA), in an open letter to the 104th Congress, identified the current system, "the pet theft industry".
B dealers across the country employ "bunchers" to gather animals for them. These bunchers are essentially unlicensed dealers, acquiring animals of unknown origin. They sell animals for five to fifty dollars to the B dealers. These exchanges may occur among individuals, or at livestock auction across the country. A concentration of these exchanges occur at "gun & dog" auctions in the Midwest. It is these bunchers who have been most frequently implicated in the actual theft of household pets. In the August 1st Congressional hearing, USDA Assistant Secretary for Marketing and Regulatory Programs Michael Dunn stated that there are, "folks who are dealing but who are not licensed, and that is a whole other problem out there. There is a very, very dirty dealing group of people out there that would stoop to stealing animals-- pets-- and market them for profit."
Moreover, both bunchers and B dealers fraudulently obtain pets by answering "free to good home" ads in newspapers. By promising safe and loving homes, dealers trick unsuspecting owners into relinquishing their pets and thereby acquire them through theft by deception. These pets are then sold to research facilities. For example, Last Chance for Animals (LCA) uncovered a pet theft ring which led to felony convictions of Barbara Ruggiero and Frederick Spero, both USDA licensed B dealers. Also convicted as part of this criminal conspiracy was Ralf Jacobsen, who had been employed to help answer ads for animals that were subsequently sold to Cedars Sinai Medical Center, Loma Linda University and the Sepulveda VA Hospital in California. Although animal advocacy organizations have occasionally exposed many individual pet thieves, it is impossible to document exactly the magnitude of the problem nationwide, and its cost to human victims who have lost their animals.
Individual pet owners are not the only citizens who have been victimized by a class B dealer's fraudulent representations. In 1994, Arizona class B dealer Greg Ludlow fraudulently represented himself to owners of greyhound racing dogs. Telling them that their dogs were no longer fit for racing, he gained possession of the dogs by promising to find them good homes. He then sold the dogs to the University of Arizona, and was only exposed due to the efforts of a coalition of animal groups and the presence of identifying tattoos on the ex-racing greyhounds. At least twelve dogs were returned from the research facility to their owners. Ludlow subsequently was fined only $500.00 and had his license suspended.
In an apparent attempt to minimize the possibility of pet owners recovering stolen pets, B dealers routinely transport animals to research facilities hundreds, and even thousands of miles away. One Pennsylvania class B dealer told an LCA investigator that a verbal "gentleman's" agreement existed between the dealer and the institutions he supplied. The agreement stated that random source animals sold to each institution could not be obtained from within an eighty mile radius of the institution. In another example, delivery records obtained from the VA Hospital in Long Beach, California show that in two transactions, Mississippi class B dealer Jerry Vance supplied ten dogs from ten different states, including West Virginia and Florida. These animals had essentially been laundered to make any trace-back attempt impossible for either pet owners or Federal regulators. In his written testimony sent to House Agriculture Subcommittee on Livestock, Dairy and Poultry chair Rep. Steve Gunderson, Assistant secretary Dunn wrote "...one animal may be recorded by multiple dealers as it travels through dealer channels to its final destination." There is no logical reason why an animal would be passed through several dealers other than as a regular practice of completely obscuring its origin. This makes it virtually impossible for owners to locate and recover their stolen property.
The AWA explicitly states that "Each dealer, exhibitor, intermediate handler and carrier shall allow, upon request and during business hours, police or officers of other law enforcement agencies with general law enforcement authority (not those agencies whose duties are limited to enforcement of local animal regulations) to enter his or her place of business to inspect animals and records for the purpose of seeking animals that are missing..." Local law enforcement officers are unaware of this Federal law, and therefore incorrectly assume that a search warrant must be obtained before a search can be made of a dealer's facility. Local authorities also assume that since the dealers are regulated by a Federal agency, the local authorities have no jurisdiction.
Contradicting the opinion of local law enforcement authorities, a top USDA administrator, in a letter dated October, 17, 1990, wrote, "... local law enforcement agencies are responsible for the arrest and prosecution of animal thieves." The USDA consistently states that its responsibility is to stop the "trafficking" in stolen animals but not specifically to deal with the "act" of pet theft per se.
State officials contradict both local and Federal opinions on jurisdiction over the crime of pet theft. In his letter of December 20, 1995, the Pennsylvania Secretary of Agriculture, responding to an inquiry at the request of Governor Tom Ridge, stated that, "Pet theft falls under the jurisdiction of the State police." Yet, the Pennsylvania Attorney General, in a July 6, 1990 letter, stated that, "... animal dealers are regulated by Federal law, not by the State. Therefore, [we] would have no authority to intervene in such matters." The Attorney General went on to say that pet theft matters "... should be referred to the office of the United States Attorney which has Federal jurisdiction."
However, the United States Department of Justice in a letter dated April 6, 1987, had previously determined, "Pet theft and trafficking in stolen property of any type are not Federal crimes, unless there is an interstate element... While it may be logical to assume that interstate traffic in stolen animals is occurring, actual proof of specific instances would be needed before any consideration could be given to instituting any prosecution." Pet theft victims are left with nothing but ambiguities in the law as they attempt to locate their missing property. The dealers effectively exploit these ambiguities to avoid prosecution, and continue their business uninterrupted.
When attempting to find stolen animals, both citizens and law enforcement officers are routinely refused entry to dealers' facilities. For example, a sheriff of Jefferson County, Missouri, was denied access to a building on the property of Raymond Eldridge, a licensed B dealer. When the sheriff notified the USDA, it responded, "this office contacted Mr. Eldridge and explained the nature of your complaint... no further action is anticipated at this time."
B dealers have gone so far as to threaten with violence those seeking to legally obtain entry to their facilities. In 1995, after the Pennsylvania Deputy Attorney General verified the legality of entry, a Cumberland County law enforcement officer and a representative of LCA attempting to conduct an inquiry into missing animals were literally chased from the facility of B dealer Bruce Rotz amidst threats and intimidation. The incident was caught on camera and aired on CBS affiliate WHPTV in Harrisburg, Pennsylvania. Rotz, repeating the same behavior he exhibited during similar search attempts in 1985 and 1990, insisted that he would only speak to "the Federal man".
APHISâ•©inspectors themselves have been denied access to dealers' facilities for even routine inspections. A USDA Office of Inspector General (OIG) Audit Report No. 33600-1-Ch, dated January 5, 1995, showed that certain dealers had histories of refusing to submit to inspections by APHIS personnel. Despite this, these dealers continued to operate under APHIS licenses, and as a result could "... bring into question APHIS' ability to effectively function as an enforcement agency."
This OIG Audit Report went on to state that APHIS personnel "... generally accommodated facility operators who routinely refused APHIS inspectors access to their facilities instead of issuing suspensions or taking other available enforcement actions. As a result, facilities had little incentive to comply with the requirements of the Act."
According to regulations, such inspections should be, to the extent practical, unannounced so that owners and operators cannot remove animals from the premises or otherwise conceal violations before the inspector arrives. The OIG Audit Report documented that APHIS inspectors called ahead to schedule appointments because of the owners repeated refusal to cooperate in allowing inspections. Another OIG Report No. HQ-3301-66 dated December 15, 1995, cited an APHIS sector supervisor who "... allegedly notified an animal facility owner of an impending investigation on his facility."
Sometimes, refusal to submit to inspections has been accompanied by even more egregious actions. USDA records reveal that Oregon class B dealer James Joseph Hickey Jr., a major supplier to UCLA, Cedars Sinai Medical Center and other California research facilities, refused to give APHIS inspectors access to records and interfered with inspections through verbal abuse and threats. Other court records document that Indiana class B dealer Jack Stowers refused to allow an inspection and "threatened to harm" the inspector if he "returned to conduct an inspection on a later date." Across the country, the actions of licensed dealers reveal a general attitude of disrespect for enforcement, a sense of impunity regarding regulations, and immunity towards the law.
One such example of a flagrant disregard for USDA regulatory authority is a situation which occurred in June, 1996, involving Arkansas class B dealer C.C. Baird. A Missouri woman named Rachel Hoenemann and her fiancÄ had a pure-bred yellow Labrador Retriever stolen from the couple's rural home in Missouri. Several other neighborhood dogs were stolen on the same day. The couple's search led them to the facility of Arkansas class B dealer, C. C. Baird.
Baird claimed to search his records for a yellow Labrador, but said he was unable to find one. When confronted by Hoenemann who had been looking over his shoulder and saw one such computer entry, Baird eventually had his wife bring out the dog with the USDA tag number Hoenemann had seen. The dog he presented to her was a Golden Retriever. Suspecting dishonesty, the couple requested to search Baird's facility but were strenuously denied access. The local sheriff, (a friend of Baird's), refused their subsequent request for assistance. Eventually, a USDA agent was permitted access to Baird's facility, and contrary to what Baird had told the couple, there were in fact several dogs that met the description of Hoenemann's stolen animal. The USDA agent rushed photos of the animals to the couple, and instructed Baird not to sell, remove, or destroy any of the dogs in question.
Hoenemann identified one dog as possibly being hers, but when she returned with the USDA inspector to the Arkansas kennel the next day, the dog had already been removed. A review of the records showed dogs had been shipped to the University of Texas in Houston, complete with fraudulent descriptions on the paperwork to cover the trail. The couple was forced to fly to Houston, but the dog they had traced turned out not to be their own.
USDA licensee C.C. Baird's actions were clearly designed to cover up what he thought was a stolen animal, property he had received in interstate commerce. Although he is already facing disciplinary action for AWA violations reaching back to 1993, Baird faces no criminal prosecution for deliberately disobeying a Federal agent's order, forging documents for an interstate shipment, and deliberately making false statements in the face of a USDA stolen pet investigation. The records indicating who had actually supplied Baird with the dog he sold to the University in Houston were un-verifiable.
Under the 1990 amendment to the AWA, enacted as the Pet Protection Act, class B dealers must document who supplied them with random source animals. The regulations enforcing this Act went into effect in August, 1993. This newly required paperwork has proven to have little effect on the flow of animals of "unknown" origin. However, it has provided a sufficient degree of evidence to reveal fraud on a widespread level on the part of both suppliers and buyers of random source animals. The USDA has testified before Congress that over half of all procurement records it checks have inadequacies and/or falsifications of the required paperwork.
The January 5, 1995 OIG Audit Report uncovered instances where "licensed dealers ... obtained animals from random sources which could not be verified... The sellers did not acknowledge any sales to the dealer, or could not be located." Individuals who were contacted to verify that they had supplied animals to a Pennsylvania B dealer had "... not actually bred and raised four of the five dogs we checked." This report goes on to say that APHIS "has cited multiple USDA licensed dealers for fraudulent recordkeeping concerning the inability to verify sources... A recent attempt by APHIS to determine the source of ten dogs disclosed that five of the sales were apparently fictitious."
The December 15, 1995 OIG Report cites the intentional action of "... a dog dealer who destroyed his records during a stolen dog task force investigation." The Report makes no mention of disciplinary action taken against this dealer for destroying possible evidence in a Federal investigation.
An APHIS random source dog "trace-back" report dated November 30, 1993, documents frequent examples of suppliers to class B dealers who could themselves not be located due to incorrect names and drivers license numbers, and people listed who had never actually supplied animals. Inaccurate record keeping, though only a minor AWA violation, seriously thwarts APHIS investigations and strongly suggests that animals have been stolen or otherwise illegally obtained.
Assistant Secretary Dunn, testifying on August 1, 1996 before the U. S. House Agriculture Subcommittee on Livestock, Dairy and Poultry, stated that "fifty-two percent" of the records designed to verify the legal acquisition of animals by class B dealers are incomplete, incorrect, or outright fraudulent. This massive recordkeeping concealment constitutes the strongest possible proof that a major market for illegally obtained companion animals exists among class B dealers. Even so, record keeping violations are considered by the USDA to be only minor infractions of the legislation.
For example, Indiana class B dealer Jack D. Stowers was shown in one inspection alone to have incomplete acquisition records for 1,317 animals out of a total of 1,490 records checked. This fit a pattern which had lasted for years, and was stopped only in December of 1996 when his license was finally revoked (pending appeal).
Under the current system, dealers found to be deficient in business and bookkeeping practices are first cited for non-compliant items (NCIs). Only after repeated citations are dealers considered to be in "violation" of the AWA, and may then receive relatively small monetary penalties called "stipulations." In the worst and most long-standing situations, dealers may face a hearing before an administrative law judge which can lead to fines, license suspension, and, in extremely rare instances, license revocation.
In its 1987 edition, the Saint Louis University Law Journal reported that, "The USDA's system of inspection and prosecutions does not appear to act as a deterrent." The January 5, 1995 OIG Audit Report states that "Many facility operators consider the stipulations as a normal cost of doing business rather than an incentive to comply with the Act. We visited six facilities where APHIS had previously levied stipulations and found that five of these had continued to commit violations of the Act."
The same Audit Report revealed that monetary penalties assessed by APHIS were not always aggressively collected and were in some cases arbitrarily reduced. The maximum amount of a stipulation is $2,500 per violation. However, an APHIS policy memorandum dated April 1, 1994 suggested that stipulations against licensees be reduced to within a range of $100 to $250 per violation. The OIG Audit Report went on to say that the effectiveness of the stipulations is further reduced by the fact that APHIS does not aggressively pursue collection, regardless of the amount.
A 1995 APHIS review of its own Central Sector office states that "Discussions with primary inspectors in many cases revealed that they had been instructed not to document 'too many' NCIs." This policy protects dealers from inspection results that might appear too negative. The review also recommends that inspectors "inform licensees that heightened public interest in animal welfare will yield stiffer penalties if compliance issues surface repeatedly." It is interesting to note that APHIS sees "heightened public interest in animal welfare" as the factor which will yield stiffer penalties, and not APHIS' own commitment to ensuring industries' proper compliance with Federal laws as prescribed in agency regulations.
Financial information, although almost impossible for the public to obtain, puts into perspective the relative insignificance of even seemingly large fines. For example, Jack D. Stowers of Indiana is documented in a December 23, 1996 court decision as having sold 10,000 dogs from 1988 through 1996. The court record asserts that he purchased animals for $25 to $40 each and sold them for $120 to $130 each. Even considering that dealers routinely sell animals for at least three times that amount, (records indicate that the University of Southern California and the University of Washington purchase dogs from class B dealers for an average of $425.00 per dog), the figures reported in the court proceedings indicate a profit of one million dollars in less than eight years. After years of operating with gross recordkeeping violations regarding the acquisition of his animals, Stowers was fined only $15,000.00.
In the May 31, 1996, a court decision against Michigan class B dealers Fred and Janice Hodgins states that in 1994, they earned $458,966.65. For multiple violations of the AWA, including failing to maintain accurate records of the acquisition of their animals, they received a $16,000.00 fine and a Cease and Desist order admonishing them to stop violating the Act. The USDA holds out the Hodgins case as an example of a successful enforcement effort. In fact, the penalty for three years of large scale violations was four percent of a single year's income and an order to stop engaging in activity that is already illegal. As the OIG pointed out, this is an example of little more than what dealers call the "cost of doing business" in this industry.
In addition to infrequent and minimal monetary penalties, the system is hindered by licensing requirements which are extremely lax. The January 5, 1995 Audit Report states that, "APHIS had renewed licenses or registrations to facilities which were in direct violation of the Act." APHIS contends it does not have the authority to revoke licenses or suspend operators due to serious or repeat violations without a lengthy administrative hearing process. During this hearing process, the operator can continue to commit the violations for which the facility was originally cited. The OIG confirms that this process typically takes over three years to complete.
The January 5, 1995 Audit Report revealed that in 1994, APHIS renewed the license of a class B dealer in Indiana for the fourth time since the operator of the facility had been referred to the Office of the General Council (OGC) in 1991 for an administrative hearing. The complaints against the dealer included, among other things, "maintaining inaccurate records of dogs purchased from individuals and pounds." In addition, the operator repeatedly denied APHIS inspectors access to the facility during this period. The case had been with the OGC for nearly three years, but no action had been taken.
The Washington state based Progressive Animal Welfare Society (PAWS) has been observing Seattle area B dealer Dave Knight and reports that he had been under investigation by the USDA since 1992. Nevertheless, he operated freely until 1996 when he was given a two year license suspension.
On December 3, 1996, the USDA notified Oregon class B dealer Betty Davis that her license, "... 92-B-0183 will not be renewed, as there is reason to believe that you violated the Animal Welfare Act and the regulations thereunder..." This is in direct contradiction to the OIG Audit Report, which states, "APHIS cannot refuse to renew licenses or registrations for any cause except failure to apply or for nonpayment of the required license fee." The USDA refuses to comment on this case, as it is still, after a full year, under investigation. Thus far, no charges either criminal or civil have been brought against Betty Davis.
In the August 1st Congressional hearing, Assistant Secretary Dunn stated that some cases resulting from the (first of its kind) 1993 records trace-back effort are still pending. When asked about the inordinate time delays in achieving any decisions against offending dealers, Dunn replied, "I convened a committee to find that out-- Internal workings-- We have to go in-- some cases through [the Department of] Justice, we have to work with our Office of Inspector General, if we are going to go after civil situations, we have to work with our Office of General Council. Quite frankly, things have sat on the desk for far too long."
By December 1996, only three dealers have ever had their licenses permanently revoked since the initial legislation in 1966. These suspensions have only occurred after (in some cases decades of) public outcry and blatantly obvious violations of regulations regarding the health and conditions of animals. In 1993, after years of complaints and investigations by animal advocacy groups, Ervin Stebane of Wisconsin had his license revoked as a result of footage obtained by LCA of Mr. Stebane shooting a dog to be sold as meat for human consumption. In 1994, after years of investigation, Jerry Vance of Mississippi also had his class B dealer license revoked for multiple violations of the AWA.
In March of 1995, Iowa class B dealer Julian Toney had his license revoked and was fined $200,000.00 only after immense public pressure. Mr. Toney had been charged with over 1,600 recordkeeping violations. He had been under investigation for almost three years during which time his operation had continued uninterrupted. The USDA remains silent as to whether this large fine has ever been collected.
In the August 1st Congressional hearing, Assistant Secretary Dunn stated that, "Every time we develop a new way to look at things, they [dealers] develop a new way to hide them." In the rare instance where a class B dealer's license is suspended or revoked, a disturbing pattern has emerged whereby a spouse, close relative, or friend easily obtains a new license and the business of trafficking in random source animals continues uninterrupted. Documents provided by the Animal Lobby in Wisconsin contain an August 6, 1992 USDA report from David Head (USDA Enforcement Specialist) to Mario Morales (SE Sector Supervisor) that exemplifies this tactic. This report showed that Lem Miller of Alabama, an employee of then licensed class B dealer Jerry Vance, "... purchased random source dogs for resale to research without having a dealer license." Miller in turn supplied Vance with these animals. The USDA revoked Vance's license, at which time Miller himself became a licensed class B dealer continuing Vance's operations.
In Oregon, class B dealer James Hickey had his license suspended for multiple violations of the AWA. He was a reputed dog thief and had been under suspicion by people in his community for many years. When Hickey's license was finally suspended, Dave Stephens, who had been a buncher for Hickey, became licensed and continued in the same illegal practices. Stephens, along with two others were eventually arrested and charged under Oregon's groundbreaking anti-pet theft law. The group had been using names illegally obtained from the Washington State Motor Vehicles Division to falsify records as to the acquisition of the animals. The charges were dropped in place of Federal charges of falsifying, concealing and covering up facts required by the USDA, making false entries and statements on USDA records, and conspiracy to defraud the USDA. In a plea bargain, Stephens along with his accomplices were found guilty of the third charge, and served sentences ranging from three years probation to ten months in Federal prison. Ironically, all of the charges brought against this group would likely be true for virtually every class B dealer who sells animals to research. However, the USDA does not actively pursue inspections of records and prosecution of violations under criminal statutes.
APHIS currently employs only approximately 70 inspectors who are responsible for overseeing 13,000 regulated sites, which include all class A and B licensees, class C licensees (exhibitors), intermediate handlers, and research facilities. New budgetary cutbacks virtually insure that inspections of class B dealers' facilities will be even less frequent, and enforcement of the regulations designed to discourage pet theft will be even more slack. The OIG Audit Report stated that APHIS "... did not re-inspect all locations where serious violations had previously occurred." APHIS responded to the audit by saying, "... some follow up visits were not made due to staffing limitations and budgetary cutbacks..."