The reason for the lock was because of illegal content on their links. Personally I'm okay with all sorts of pretty grey area things but it's stuff that I don't even want to mention for the sake of his credibility of a webmaster. Straight up no-go, I remember now seeing advertisers complain about it. I'd rather just pay him out his balance and block that domain from even showing up on the network than be associated with that kind of content.
Be careful you don't violate your own policies by describing what the OP did wrong... handle private information more carefully, unless you plan to modify your terms to say certain violations will be public knowledge...
If what you posted is true, you've basically called the OP a lair, since he violated your terms.
I have not violated any terms of service or committed any type of fraud.
That statement is said with fact and in the utmost confidence.