Some animals supplied for round-the-clock assistance for paralysed people, diabetics and extreme allergy sufferers were not even fit to fetch a ball.
Ex-trainer Janne Kovaljeff, 43, described his time at Irish-based SDE as "horrifying" as he revealed how one dog was so ill it died within days of delivery to a vulnerable customer who had shelled out thousands of pounds.
The company, run by Henry Fitzsimons, has now shut down while allegedly still owing hundreds of thousands of pounds to its customers.
Mr Kovaljeff, who worked for SDE for more than a year, claimed Mr Fitzsimons sacked anyone who complained about the regime.
"I warned Henry he could kill someone," Mr Kovaljeff said.
According to an investigation to be published on Thursday in Dogs Today, animals were sold by SDE with virtually no training and within weeks of arriving at the centre.
Mr Kovaljeff, who has been training dogs since leaving school in Finland, said: "The crazy thing is, Henry could have made SDE a very good business.
"He had all that money coming in, some brilliant trainers, good facilities, all those people desperate for life-changing dogs, but he just wouldn’t listen. So many people tried to get him to do it properly, but he either sacked them or shouted at them until they left. It was quantity not quality.”
Some were bought from unregistered sellers on websites such as Gumtree while others were sent to Britain without pet passports.
The trainer added: “They’d be kept in the school for two or three weeks. Very often, they’d be poorly and on antibiotics.
"They’d be in kennels almost all the time. I’d try to do my best, but we couldn’t take them out to socialise them.
"It was all about quantity not quality. Henry wanted us to train 16 assistance dogs a month. When we told him it was impossible, he’d just tell us we had to. It was soul destroying. I felt so bad for the families."
Describing the working conditions at the centre based in County Louth, Ireland, he added: “Henry installed CCTV cameras to check up on the staff. He had money for that, but not for training the dogs properly."
"Henry always blamed the recipient not the dog when things didn’t work out"
She paid SDE 3,995 euros, plus VAT, after Medical Detection Dogs, one of seven Assistance Dogs UK members, had told her she would face a lengthy waiting list for help to find a dog capable of signalling her life-threatening dips.
Ms Golding told Dogs Today that she was forced to reject the first dog SDE offered her before they send Bertie as an alternative.
She added: "I have since been told that the poor dog I rejected was sold a further three times for a total of £21,000 – each time she was rejected and no refund given. Henry always blamed the recipient not the dog when things didn’t work out.
“I’ve also heard that as well as puppy-farmed dogs, Henry was buying in dogs online from sites like Gumtree and taking dogs from the pound and selling them on as assistance dogs.
“This is obviously hearsay, and is simply what I was told by someone Henry sacked. He maintains she is a lying, disaffected trouble causer.”
Other victims of the bogus firm include Joanne Buckley, from Liverpool, who claims she spent £4,000 on a dog which could not even fetch a ball for her autistic son.
Diabetic Stephanie Mortlock, 22, from Bromley, Kent, also claims the charity has made off with £1,600 she was collecting for a dog that could monitor her blood sugar levels.
The Telegraph revealed on Wednesday how SDE is being investigated by industry regulators and an MP over claims it has folded without returning customers’ money.
Campaigners said charities providing assistance dogs are refusing to take on fresh clients because waiting lists are so long. At the same time guide dog charities providing animals for the blind are said to have a funding "overspill", it is claimed.
Beverley Cuddy, editor of Dogs Today, said industry insiders believe SDE has let down as many as 400 families. She said: "This is a full scale crisis in the industry."
Kirsten Dillon, head of training and behaviour at assistance dog charity Veterans with Dogs, said: "The seven ADUK charities are swamped but if only people donated the millions of pounds they gave to SDE to little charities like DogAid - that is set up to train people's own dogs in their own homes - then the waiting lists might be able to be opened."
The importance of assistance dogs was highlighted over the summer as it emerged how one had saved the life of disabled Anita Castellina, 62, from Blackpool, who was unable to move or call for help when she rolled the carriage after swerving to avoid children riding on skateboards.
George the Spaniel went to fetch help before returning to her side to keep her warm. The PDSA has awarded him the prestigious Commendation for animals who have saved or enriched the lives of their companions.
Mr Fitzsimons was unavailable for comment.