you sure you setup your campaign correctly? from what it sounds like, you didn't limit your campaign to search. also it would be VERY interesting to see how you not only setup your ad group but also what keywords you used for each group. typically when we see people complain about ad fraud we see alot of basic mistakes that they made when setting up their campaign. i hate to say it, but 99% of the people out that claim they know how to setup and manage a google ads campaign are amateurs at best and don't know the basic foundations of the way google ads works.
As mentioned, this was Google's Smart (display) Ads not their traditional search ads. I've had good success with the latter but decided to try the former on their suggestion.
