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Dress it up however you'd like. Between cookie stuffing, carding, and bidding competitive terms, two are fraudulent and one isn't. His leads were IN NO WAY FRAUDULENT.
Putting together a keyword list, most marketers check the terms to see what keywords are disallowed. Places that don't want to have competition on their terms lay it out plain and clear, and if there is nothing specifically stated, it is free game in the PPC world.
If he was sending you junk signups, then it's understandable. this is your loss and your fault, and he spent his money promoting your program 100% legitimately.
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