Have you asked the husband about the dog? Maybe if you offered to help them find a new home for the dog or if you offered to bring him to a shelter for them they would agree to that. Does your daughter have any insight on the family's feelings toward the dog? Sounds like if anything happens to the dog they'll know it's you and I wouldn't want them to steal one of your pets to get you back. If the helpful polite approach doesn't work, I would inform them that you will call the humane society or someone to come check the situation if you don't see a change. At least if you do everything legally you will always be able to retaliate legally.

If the dog is in view of strangers who happen to travel the street, I'd go the anonymous route, they sound like scary neighbors! Good luck.