My way of understanding is (and someone please correct me if I'm wrong) is Breed Clubs (such as the German Shepherd Club of America) and Registries (American Kennel Club) are two completely different entities that can and often do work together.
Most breeds have a "Breed Club", or an organization that strictly deals with that particular breed, sets the standards and focuses adheringly to that one breed. They don't deal with other breeds or variations of breeds.
Registries generally enlist many breeds, such as the American Kennel Club having 250 (I know that's not accurate) registerable breeds. They're not necessarily a breed specific organization, and look at the sport of raising purebred dogs in a whole, rather than individually. But they do, often have ties to the parent breed club, for those who want more specific and specialized instruction or information.
Both can and do hold shows, but points may not cross over, unless both organizations participate and sponsor the show.
If you suspect someone is breeding unethically, you should first find out who they're affiliated with and then report them to that organization. If there's more than just unethical practices, and dogs are suffering, then you should report them to the police.