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LARIMER COUNTY - A donation intended to help veterans has turned into a dispute over a dog.

Ivan and Amy Smith gave an Olde English Bulldogge named Diesel to the Ha=lo Project, assuming the animal would live with a soldier.

Ha=lo volunteers say that was never the plan, and the dog will be used for breeding.

"We figured it'd be a cool thing to have a solider have one of our bulldogs," Ivan Smith said.

The Smiths heard the Ha=lo Project out of Loveland was looking for bulldogs, which they assumed would be donated to veterans.

"We just figured it'd be good to give back," he said.

The Smiths breed and sell bulldogs at home and sold a puppy named Diesel to Ha=lo cofounder Terry Jester at a 60 percent discount.

"Our puppies start at $2,500," Amy Smith said.

Jester paid $1,000 to cover medical expenses. The remaining $1,500 was an in-kind donation to Ha=lo.

Jester is the co-founder of Ha=lo, but she's also a professional breeder with a dog training business.

"Therefore what they sold me was a breeding dog," Jester said.

Jester says only some of the puppies will go to Ha=lo, and the others will be sold for a profit.

Jester insists she did not mislead the couple.

A registration certificate proves Jester has the legal right to breed Diesel because the Smiths never checked a box on the back that would have taken away breeding rights.

"If she didn't want it bred, she should've checked it," Ha=lo cofounder Cathrun Bray said.

Bray thought the Smiths understood Diesel would be used for breeding but neither side can produce the contract they both say they signed.

"Nobody did anything with a malicious intent," Bray said.

Bray points to veterans who the Ha=lo Project has helped, like retired Army Specialist Patrick Amie, who lives with PTSD and a traumatic brain injury

"I absolutely believe that the Ha=lo Project is saving marriages and saving lives," Amie said,

Ha=lo has an operating agreement with the First United Methodist Church in Loveland, even using the church's federal tax ID number.

"[Ha=lo has] done a lot of good work with veterans," senior pastor Reverend Doctor Jane Y. Riecke said.

Riecke is concerned this dispute reflects poorly on Ha=lo, and the church.

"[This] is very upsetting. We hope that this can be corrected very quickly," Riecke said.

Riecke, Bray, and other Ha=lo volunteers are asking Jester to return Diesel.

"No, I'm not going to give them Diesel back," Jester said. "I paid for that dog."

"We just want the puppy back," Amy Smith said.

The Smiths say they'll return the money if it means they can donate Diesel to a veteran in need.

"I think what they're doing is wrong," Ivan Smith said. "For them to keep him, breed him and pump puppies out of him."

The Smiths say it's a life they never wanted for Diesel.

Late Wednesday night, 9NEWS learned Terry Jester and the Ha=lo Project have parted ways.

Jester posted on Facebook she believes Diesel's current situation is best for him. She does not intend to return the dog to the Smith family.

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