Alison,
At the very basic level you have paid for your cats, so they are your property. This neighbour has illegally deprived you of said property and you have no alternative but to apply the Law.
Whether that is by telling them you will call the Police to have the cats removed and have them arrested, simply calling the Police or bringing Civil charges with the massive costs for them is up to you.
I know your cats mean more to you than this, but the Law deals in cold facts - which are on your side.

Dave.