Texas-Sized Scandal Over Pint-Sized Pooch

Call it Puddles-gate.

A brouhaha over ownership of a Shih Tzu puppy has led to the resignation of the mayor of the tiny town of Alice in southern Texas, reports Gabe Caggiano of CBS station KZTV in Corpus Christie.

He says Grace Saenz-Lopez has been accused of stealing another family's sickly dog -- Puddles -- and claming, first, that Puddles was dead, then that Puddles had run away -- after Saenz-Lopez watched Puddles one weekend in July.

The then-mayor agreed to babysit Puddles while the dog's owners, the Gutierrez family, went on vacation, Caggiano explains. But, when the Gutierrezes checked in on Puddles, Saenz-Lopez told them Puddles had died and she had buried him in the backyard.

Three months later, Puddles was spotted at a groomer outside town. And Puddles had been given a new name -- Panchito.

Saenz-Lopez was asked by Maggie Rodriguez Friday to justify her actions. She appeared on The Early Show along with her twin sister, lawyer -- and Puddles/Panchito. To see the video, .

Even when the family confronted her, she refused to return the dog, Caggiano says. The Gutierrez children were heartbroken, and the family became determined to get Puddles/Panchito back. They legal action, first filing a complaint with police, then a lawsuit in district court.

In January, Saenz-Lopez filed a "missing dog" report with the police, and accused the Gutierrez family of stealing the dog from her.

But, Caggiano says a KZTV crew found the dog -- at the ranch a few miles from Alice of Saenz-Lopez's identical twin sister -- who denied that the pooch was indeed Puddles.

At that point, Alice Police Chief Daniel Beuno stepped in, telling Caggiano he would "meet with the city manager as well as the director of criminal investigations."

That led to Saenz-Lopez and her twin being indicted, on multiple felony charges that could put them both behind bars for up to ten years.

The mayor's lawyer made his own accusations, calling it "a conspiracy. That dog could very well could have been planted there."

As the scandal crew, so did a recall movement in Alice. More than 100 signatures backing the effort were gathered.

Then, on Friday, the mayor resigned.

Now, a judge will decide who gets Puddles/Panchito. Saenz-Lopez has temporary custoday.

The majority of Alice's residents are glad Saenz-Lopez quit, Caggiano says, but worry that what's happened will hurt the town's reputation.

He told Early Show co-anchor Julie Chen Thursday that Saenz-Lopez claims the Gutierrezes mistreated Puddles, but has offered them several hundred dollars to buy another dog.

Caggiano added that Saenz-Lopez pretended to be her twin sister when he showed up at Saenz-Lopez' house one day.