He was touted as the best of the best: Donor 9623 had an IQ of 160 and was an internationally acclaimed drummer who was working towards a PhD in neuroscience engineering.

A lawsuit, filed on Wednesday by three families in Canada, alleges the donor was instead a convicted felon with multiple mental illness diagnoses, including schizophrenia.

Filed against Georgia-based Xytex Corp and Outreach Health in Canada, the lawsuit alleges that the donor’s sperm was used for as many as 36 children in Canada, the United States and Britain.

“If proven, this takes the case from shocking to truly outrageous,” the families’ lawyer, James Fireman, told the Toronto Star.

Xytex denied any wrongdoing through its lawyer, Ted Lavender. “Xytex is an industry leader and complies with all industry standards in how they safely and carefully help provide the gift of children to families who are otherwise unable to have them without this assistance,” Lavender said in an email to the Guardian. Outreach Health did not respond to a request for comment.

The lawsuit seeks C$15.4m ($12m) in damages and relates to three children, ranging in age from four to eight years old, created from the donor’s sperm.

Xytex has denied any wrongdoing through its lawyer. Photograph: David Goldman/AP

None of the allegations in the claim, which include wrongful birth, failure to investigate and fraud, have been proven in court.

The alleged discrepancy between the donor’s online profile and his identity first came to light in 2014, after the donor’s email was accidentally sent to recipient families. A quick Google search revealed a number of red flags.

Angie Collins, one of the parents behind the lawsuit, said panic began to set in as she frantically searched online for something that was more consistent with the donor whose profile boasted of speaking five languages and four or five books a month. “It just kept getting worse and worse,” she said. “It was like a dream turned nightmare in an instant.”

The claims filed in court alleged the donor has been diagnosed with schizophrenia, narcissistic personality disorder and grandiose delusions. They also allege the 39-year-old from Georgia spent eight months in jail after a residential burglary in 2005 and graduated with a bachelor’s degree just last year, 20 years after enrolling.

He applied to be a donor in 2000, according to the lawsuit, and was not required to prove his identity. He reportedly continued to sell sperm until 2014, raising questions about the ethics of paying for sperm donations.

Collins, a 45-year-old teacher based in Toronto, said her eight-year-old son had not shown any signs of mental illness to date. But she was wary that his life “could just turn on a dime in puberty”.

She held little blame for the donor and instead directed her anger at the company. “He should not have done what he did, but the big problem is not with him,” she told the Star. “It’s with [the] companies that allowed him to donate and sold his sperm.”

She and her partner spent about four months researching sperm donors before settling on Xytex in 2006, reassured by reports of its high-quality donors and rigorous screening. “You can rest easy knowing right up front – Every Xytex donor ranks in the top 1% of the population in health and wellness,” reads Xytex’s website.

Collins wants sperm banks to better screen donors, including carrying out medical and criminal background checks. She also hopes to push Xytex to create a medical fund for children affected by Donor 9623, to be used for intervention and treatment should any of them show signs of mental illness at a later date.

Nancy Hersh, a lawyer based in San Francisco, said she was planning to file additional lawsuits on behalf of American and British families affected by the donor in the United States in the coming months.

Wednesday’s lawsuit marks the second time Collins has tried to sue Xytex. Last year a court in Georgia dismissed the lawsuit after considering it a claim for wrongful birth, which is not recognised under the state’s law. An appeal filed in that case was later dismissed over procedural issues.

Lavender, the lawyer for Xytex, pointed to the previous lawsuit in defending the company. “Xytex looks forward to successfully defending itself from the new lawsuits with the same results as the original case,” he said in his email. “Pursuing claims in a court of law requires actual evidence and proof. Making unfounded allegations in the court of public opinion requires no actual proof at all, but merely the word of the very lawyers and litigants who already failed in a court of law.”