This is an urban legend I think. I remember reading a long post about it about a year ago.

Not a legend. Better to take a couple of seconds to look something like this up rather than dismiss it. It's always better to be safe than sorry.

Here is a link that might be useful: cocoa mulch toxicity

chocolate is VERY DANGERIOUS for dogs! and chocolate is made from.....

From the Snopes page: This warning about the potential danger to pets posed by cocoa mulch began appearing in our inbox in May 2003. Unlike the majority of scary alerts spread through the Internet, there is a good deal of truth to this one, although we haven't encountered any substantiated cases of pet deaths caused by ingestion of cocoa mulch.

Chocolate candy, baking cocoa, unsweetened chocolate can be dangerous for dogs. Cocoa mulch is another matter entirely.

It's been in wide spread use for many, many years now and like Snopes I've never heard or read of a documented case of a dog being poisoned by eating cocoa hulls.

.....Alan.