Previously House Trained Dog Peeing and Pooping Inside?

I have a 2 year old Italian Greyhound/Pug mix (pugit) His name is Charlie. Charlie is a rescue dog. He was received by a family that could not handle him and then passed to us. (myself and two kids)

He had limited training as a young pup due to his living condition. When we received him in October of 2010 he had been crate and potty trained well. He whimpered at the door to go out a reasonable amount of times a day. He is with me during the day and rarely left at home alone for long.

My issue is: over the last couple of months (late October) he began to defecate in my kids' room. We thought perhaps he tried to go out and we didn't notice. No biggie. I told him no, showed him, sent him to bed and then made a mental note to pay closer attention in case we are leaving his request to go out unnoticed. Done or so we thought.

He has been increasing the times he goes potty (both now) in the room. He doesn't even try to go out and aims only for the kids' room and only when we aren't home. He gets taken out often and usually will urinate, but that is it. It almost seems as though he holds it until we leave, then goes in the kids' room. We have to shut the door when we leave.

He doesn't go anywhere else. It seems like a behavior issue, like he is trying to make a point, but I'm lost. We have increased his potty times, we have made a schedule that is generally followed and continue time outs when he goes in the room, but all with no luck or change. He is at the point now, that if he has gone in the room and I head that way, he already heads to bed before I can even say anything. He already knows. It seems like purposeful defiance. Any suggestions?

By Gina