I have heard about this before. I have worked in a shelter and whenever a 'pitbull' came in a photo was taken before being put into the 'stray' pens. Now sometimes these dogs were brought in by the public and sometimes by the council. Depending on whether a council ranger saw the dog or not would depend on whether it was released willingly to the owners or not. But it also depended on which council worker saw / didn't see the dog. (Some rangers are just plain lazy.) It is in the rangers power to not release an animal to it's owner if they have suspicions on breed or treatment the animal receives with its owner.
"In order to really enjoy a dog, one doesn't merely try to train him to be semihuman. The point of it is to open oneself to the possibility of becoming partly a dog." - Edward Hoagland