A Fraser Valley breeder who sold a parasite-infested puppy to a North Vancouver woman last month was convicted in February in the U.S. on animal cruelty charges and banned from owning or possessing dogs or horses there for two years, CBC News has learned.

Now questions are being raised about how, despite the U.S. convictions and serious animal welfare charges, the couple was able to operate in B.C., selling a sick puppy to North Vancouver resident Tanya Oliva in June.

One of the dogs that was rescued had an untreated broken leg that had to be amputated. (Whatcom Humane Society)

Up until February, B.C. resident Tarasa Shively and her American husband, James, lived in a luxury home 40 kilometres northeast of Bellingham off Mount Baker Highway — a home where Whatcom Humane Society told CBC News that animals lived in horrible conditions.

Inside a shed, investigators found what they described as a puppy mill containing more than 30 dogs — 12 adult dogs in filthy cages so small they could barely turn around and 19 puppies sitting in their own excrement and lacking access to food or water.

Up until February, the Shiveleys lived in this well-appointed home 40 kilometres northeast of Bellingham, Wash. (CBC)

One dog had an untreated broken leg that had to be amputated.

The Shivelys were prosecuted in Whatcom Country District Court, convicted and banned from owning or possessing dogs in Washington State for two years.

Laura Clark, the executive director of the Whatcom Humane Society, says it's a small but important victory.

"The only way to stop this is to prosecute them and get folks to stop buying their animals," she said. "Hit 'em in the wallet."

Clark says prosecuting these types of cases is always an uphill battle.

The Whatcom Humane Society says some of the puppies were rescued from this shed. (CBC)

"This was a heartbreaking situation because we couldn't help enough," she said. "We couldn't do enough...and the laws are weak."

Much to their frustration, before the judge issued the ban, James Shively was allowed to collect his dogs from the Whatcom Humane Society.

"It's just a really sad, sad, terrible situation," said Clark.

The society told CBC News it believes Shively made straight for the Canadian border, taking his puppies and his business with him.

The Shivelys also housed dogs in kennels in their garage. (Whatcom Humane Society)

Shortly after a CBC News story aired about the sick puppy Tanya Oliva bought from the Shivelys, the couple pulled down its Maple Falls website whose Langley location falsely advertised that its puppies "play in our backyard ocean bay," even though the kennel's location is 30 kilometres from the Pacific Ocean.

Even though his name is on the paperwork, Shively claims he didn't sell the puppy directly. He says he was acting as a broker on behalf of someone else.

Shively say accusations are exaggerated

Now he says he's out of the business.

"We've got out of the dog-breeding business because we couldn't keep operating with those kinds of attacks coming from all sides."

Shively says they sold all their dogs to a breeder located somewhere in Ontario when they came back to Canada.

The Shivelys were found guilty of animal cruelty for the living conditions of dogs they owned and housed on their property. (Whatcom Humane Society)

Shively says the Whatcom Humane Society's accusations are exaggerated.

"They were really nasty and aggressive down there," he told CBC News. "So I wouldn't put a lot of faith in what they said...The conditions weren't as bad as they were saying they were."

"And the broken leg — it was treated and we did deal with that. It was an accident. She just fell off the stairs. They took everything they could and just blew it out of proportion. So we're not doing that anymore because of just all the constant attacks and battles. It's not worth it."

Despite his statement, the Shivelys had another animal website, Emerald Waters Kennel that was still up when our story aired, but was taken down shortly afterwards.

The Whatcom Humane Society says it's upset the Shivelys had managed to keep operating in Canada and say they are receiving little co-operation from the B.C. SPCA.

The B.C. SPCA's Marcie Moriarty, who heads up animal cruelty investigations, says the society can't share information on investigations because of Canadian privacy laws, but it would like to see an international database of convicted offenders.

"We're all for systems that are transparent and really flush out these people who are harming animals and harming consumers," she said.