I'm so sorry about little Capone. Now, personally, I don't take my babies to the vet unless I HAVE to, because you can wind up exposing them to more diseases than you ever vaccinated them for in the first place.
I do all my own vaccinations, but I do offer a 1 year health guarantee against things like this. She should at least offer you half your money back, OR at the VERY she should have given you said amount of time to take him to the vet to check his health. But I understand falling in love with them when you see them. I too have learned the hard way in the past. My sister's dog, Chloe, came from a puppy mill and she has a heart murmer. She's almost a year old, and it hasn't affected her health at all so far, but it's still there. Only time will tell I suppose...
I'm not sure what to tell you about reporting. Did you ask the breeder if she would be willing to come to a financial agreement with you? Then maybe if she disagrees or is rude you could report her?
Good luck, I hope little Capone is ok!!