This story has been updated to reflect responses from Dalewood and the Weight Loss Grants Organization which were posted on their websites after publication of this story.

The ads ran across the country — get paid to lose weight — enticing many Canadians trying to shed pounds to sign up. Go Public has been flooded with messages from some who say when it came time to deliver, the so-called Weight Loss Grants Program wouldn't pay out, or dragged customer claims out for months before cutting a cheque.

During our investigation, we heard from dozens of dissatisfied customers unhappy with the program run by a private, for-profit company. Some thought, because of its name, it was a government-run program issuing "grants."

The Weight Loss Grants Organization now has a notice on its website that the grants program "has now concluded."

"It's good for the consumer," said Richel Prevost, of Calgary, who heard about the program on the radio two years ago. At the time, Prevost, 5'6", was tipping the scales at over 200 pounds and desperate to lose weight.

She thought she'd found the solution — a grant program that would give her access to a high-end diet program then reimburse her for up to 80 per cent of the cost when she lost the weight.

She was wrong.

Prevost before and after her weight loss. She reached her goal ahead of schedule and was told for months that her documents were being reviewed. She found out through Go Public that her claim had been denied. (Submitted by Richel Prevost; Rosa Marchitelli/CBC)

"I literally worked my butt off and I just don't feel like their end of the bargain is being held up," Prevost said.

She signed up in September 2017 and paid $2,400 up front to the diet clinic the grants company recommended.

She said she was told if she used Dalewood Health Clinic she'd get up to 80 per cent back in a grant, up to 20 per cent if she used a different one.

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Prevost said she lost 50 pounds on her own through diet and exercise and reached her weight loss goal five months early. A year later, she is still trying to collect her grant.

"It felt like they were moving the goalposts," Prevost said."Every time that they asked for something different I complied."

Grants denied

Her grant was recently denied based on a rule that didn't exist when she lost the weight.

The Weight Loss Grants Organization told Go Public Prevost won't be getting her grant because she recorded her final weight five months early instead of on the exact deadline date.

That rule was introduced in April, long after Prevost finished the program and submitted her paperwork.

"You can't change the rules like that in the middle and deny me my claim based on something that you implemented after the fact," Prevost said.

Jenn Granger from Calgary paid Dalewood $2,100, lost weight, and met all the requirements in October. Her grant was also denied based on the rule that kicked in last month.

The Weight Loss Grants Organization told Go Public that the documentation Jennifer Granger's doctor sent 'does not appear to be a legitimate patient record.' (CBC)

"I'm not sure how we would possibly be able to follow such a rule when I submitted [for the grant] six months before they made the change," Granger wrote Go Public in an email.

The Weight Loss Grants Organization didn't respond when Go Public asked how a new rule can apply to old cases.

David Stein, who describes himself as the adjudicator at the Weight Loss Grants Organization, said Granger's grant was denied because the letter she submitted from the medical clinic to prove her weight loss "does not appear to be legitimate."

Go Public spoke with some people who say they did get their grants.

'Thank you' required before grant approved

The Weight Loss Grants Organization's website has a long list of thank-you letters from participants who say the program helped them lose weight.

After losing 25 pounds, Larry Smith got an email saying his grant was approved and a cheque would be mailed to him. When he started asking questions, he was told his grant was subject to an audit. (Nicolas Amaya/CBC )

Those letters are a requirement before the company will even consider paying out a grant.

Larry Smith said he wrote a thank-you letter and last August and received an email saying his $1,920 grant was approved but after months passed with no payout, Smith contacted Go Public.

Stein said Smith hasn't received a cheque because he failed to get a required letter from his doctor. No one from the company told Smith.

Larry before he lost 25 pounds. He paid $2,400 for a weight loss program and was told he'd get $1,920 back. He's been waiting for a cheque since last August. (Submitted by Larry Smith )

Go Public links 2 companies

The Better Business Bureau of Central Ontario has given the Weight Loss Grants Organization an "F" and Dalewood a "D" rating due to the high number of customer complaints.

"Consumers feel like they've achieved the requirements of the grants but for what might be a technical reason, they're not getting the grant at the end," said spokesperson Patrick McKeen.

Patrick McKeen is the president and CEO of the Better Business Bureau of Central Ontario. BBBs across the country have received complaints about the Weight Loss Grants Organization and Dalewood clinics. (Keith Burgess/CBC)

Dalewood is now in the process of changing its name to Trillium Weight Loss.

It turns out Dalewood and the Weight Loss Grants Organization are connected.

Go Public found the two companies shared an address for years and have a senior manager who works for both companies.

In emails and letters to clients, George Scodras refers to himself as the director of operations of Dalewood and of the Weight Loss Grants Program.

He was also listed as director of operations for Dalewood on its website, until Go Public started asking questions about his connection to both companies.

The screen-grab on the left is an old version of a page on Dalewood's website. The image on the right is a screen-grab of the same page after Go Public started asking questions about George Scodras, who works for both Dalewood and the Weight Loss Grants Organization. Scodras is pictured at the bottom left.

All references to Scodras have since been removed from the Dalewood website, while the Trillium website lists him as a "managing consultant."

We asked the Weight Loss Grants Organization how much it has paid out in grants since the program started in 2015, and why so many people have complained about not getting money they thought they were due.

"The total number of grants paid out as of April 30th, 2019, is $733,552.71 (according to info given to me)," Dalewood spokesperson Marissa Mayles wrote in an email to Go Public.

That number can't be verified, but Go Public did speak with other former customers who say they got their full grants after using Dalewood.

Clients say they weren't told about any connections between the Weight Loss Grants Program and Dalewood when they signed up.

Conflict of interest?

In an email to Go Public, Mayles said, "we do not feel that there is a conflict of interest … Nobody is obligated to sign up with Dalewood and they can go wherever they like to lose their weight."

Mayles didn't give her exact title, but said she works in the finance and administration departments at Dalewood.

Dalewood and the Weight Loss Grants Organization are headquartered in the same office building in Toronto. They used to share an office, but are now located in separate units. (Lori Ward/CBC)

She is also the wife of the company's founder, Darren Morgenstern, who also founded Ashley Madison, the adulterous dating site with the slogan "Life is short. Have an affair." Morgenstern sold Ashley Madison in 2007.

Mayles said Dalewood and the Weight Loss Grants Organization are not connected but, "the owners are all connected and know each other well and the relationships predate either business."

As for Scodras, she said he's not an employee of either Dalewood or the Weight Loss Grants Organization but "a temporary consultant ... an impartial disinterested party that is acting on behalf of all parties, including grant applicants."

'Too many problems'

Stein said the Weight Loss Grants Organization will continue to honour "legitimate grant requests," even though the program has been shut down.

The Weight Loss Grants Organization told Go Public in an email that it 'no longer wish[es] to serve candidates in the weight loss community,' but will honour all legitimate grant requests.

"There have been too many problems which began for us late last year when we had to start enforcing our rules and having zero tolerance for improper documents, but we had no choice as there were far too many bogus grant claims," he told Go Public.

The grants company has posted a reaction to Go Public's story on its website. The Dalewood and Trillium websites both have postings saying they're no longer accepting new clients affiliated with the Weight Loss Grants Organization.

Prevost said she plans to file a fraud report with police and may try to take the company to court.

"I am not in a position to lose $2,000," she said, "The reason I did this is because I thought I was going to get my money back ... this is crazy."