Some people who bought puppies at The Pet Zone in Poughkeepsie were actually renting pets unwittingly, according to a lawsuit filed by the state attorney general that alleges a broad pattern of illegal and deceptive business practices.
Now the state is trying to shut down Bell Pet Co., the operator of four Pet Zones in New York, and stop owners Theodore and Sheila Bell from ever selling live animals again.
A judge in Watertown, New York, granted the state preliminary approval on Wednesday by issuing a temporary restraining order.
It appears, wrote Justice James P. McClusky of Jefferson County Supreme Court, “that respondents have engaged in repeated and persistent illegal, fraudulent and deceptive acts.”
An Albany attorney for the Bells, Javid Afzali, said no notice was given of the hearing for a restraining order and the Bells had no chance to argue the merits of the case.
“We are aggressively fighting the charges,” he said in a telephone interview. “We believe the charges are frivolous.”
The state claims that Pet Zone stores have repeatedly committed fraud, violated the Pet Lemon Law, sold dogs without having them examined by a veterinarian and failed to disclose medical treatment the dogs received at the stores.
“Pet dealers have a legal and moral responsibility to provide proper treatment to the animals in their care,” acting Attorney General Barbara D. Underwood said in a statement, “and consumers deserve to have confidence that the pets they purchase are certifiably healthy.”
Bell Pet Co. started in 2006 and operates Pet Zone stores in Albany, Poughkeepsie Galleria Mall, Queensbury and Watertown.
The business appears to be lucrative, as described in the state’s petition.
Pet Zone stores sold 5,567 dogs from January 2014 to July 2017, according to the state. Customers paid as much as $3,899, or up to three times the wholesale cost from a Missouri puppy distributor. The average price was $1,800. That works out to more than $10 million, or about $2.9 million a year.
The Bells manage the business from their home in Port Charlotte, Florida. Ted Bell works no more than three-and-a-half hours a week, the state said, based on his testimony in a deposition, and Sheila Bell had limited responsibilities overseeing bookkeeping and warranty claims.
They each received net salaries of $4,000 to $5,000 every two weeks, for a total of $208,000 to $260,000 a year for the couple.
Ted Bell said at his deposition that employees were encouraged to accept an ill dog if they believe it was in the puppy’s best interest, the state complaint says, but former employees testified at depositions that they were chastised for not sending sick puppies back to the wholesaler.
Former employees said dogs were regularly sold prior to having a medical examination. Sick dogs were routinely medicated with doxycycline, an antibiotic, without the knowledge of a veterinarian. Records were destroyed, the state claims, and treatment histories were hidden from customers.
“You have to consider the sources,” Afzali responded. “These were employees who were terminated for just and proper causes. We intend to bring in employees and managers who will say the exact opposite.”
He added, “There has never been a case of a dog sold without proper veterinary treatment.”
In 2014, Pet Zone stores began offering financing through WAGS Lending, a Nevada company, and after it filed for Chapter 11 bankruptcy, and then through Nextep Funding, also based in Nevada.
Despite the “lending” in WAGS’ name, the state says the contracts were closed-end consumer leases.
First payments were made to the stores, and customers were given paperwork that described them as the owner, pet parent or purchaser.
Initial payments were made directly to the stores, and then to WAGS for another 12 to 36 months. At the end of the term, customers had an option to purchase their dog for an additional fee, the state says, or return the dog to WAGS.
Generally, WAGS contracts cost more than twice the original cost of the puppy.
Ted Bell estimated that 25 percent to 30 percent of the purchases were financed this way, the state says, and the service increased his business by about 15 percent.
Afzali said he could not comment on financing because the contracts were provided by third parties, “like buying a car and getting a bank loan.”
The temporary restraining order requires the Bells to stop buying more dogs, produce an inventory of all puppies not yet sold and report weekly on the status of all of their animals.
The state is asking for a permanent order banning the Bells from operating any business involved in the sale of live animals in New York, requiring them to reimburse customers who bought sick puppies, and paying fines ranging from $1,000 to $5,000 for each violation.
McClusky scheduled a hearing for June 1 in Watertown.
“We believe we are going to prevail,” Afzali said. “The facts will speak for themselves.”