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The Toronto man behind a controversial business scheme to repay people for losing weight says his company did not improperly deny thousands of dollars in valid claims as alleged by a slew of dissatisfied clients across Canada.

“It was a public relations nightmare, we mishandled the process and we did not do a good job,” said Darren Morgenstern, the public face of Weight Loss Grants.

However, Morgenstern, who agreed to a lengthy sit-down television interview exclusively with Global News following several unflattering news reports about the company, denies he did anything illegal.

“Of course not. I’m not a scammer,” Morgenstern said in response to questions about why his company denied claims from customers who say they lost the required amount of weight to qualify for a rebate but were not paid.

0:54 ‘I really believe you guys are a bunch of scammers:’ Weight Loss Grants customer ‘I really believe you guys are a bunch of scammers:’ Weight Loss Grants customer

“They’re good, fine folks who want to do the right thing to lose weight,” Morgenstern said, acknowledging the efforts of thousands of clients who signed up in 2017 and 2018.

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Nevertheless, as Global News has reported previously, a large number of Weight Loss Grants clients who lost weight through the program say they have been stonewalled for a year or more because the company has repeatedly changed the rules for reimbursement.

“I lost the weight. I worked really hard. I expected something at the end — my reward — and I didn’t get it,” said Janet Minas, a client in Toronto.

“For what reason? I met the goal. I handed (them) everything (they) needed, the doctor signed off on everything,” Minas told Global News.

Like many Weight Loss Grants customers, Minas paid one of the company’s affiliated diet clinics, Dalewood Health and Wellness, more than $2,000. Under terms of the offer, Minas said she was assured of an 80 per cent rebate of that fee provided she succeeded.

Minas produced proof of weight loss: a signed statement from a Dalewood clinician — a nurse practitioner.

0:32 Weight Loss Grants was a ‘contest’: company director Weight Loss Grants was a ‘contest’: company director

At the time her weight loss program ended, the documentation was sufficient to qualify for the rebate, she said.

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Even so, Weight Loss Grants did not pay.

Morgenstern said he reviewed Minas’s claim after Global News brought her case to his attention.

“My sense is there is no PVR (patient visit record) supporting her weigh out and given some of the notes I’ve seen in her Dalewood account … she did not weight 150 pounds on her deadline,” he said in an email.

More than a dozen other Weight Loss Grants customers contacted Global News and said they were also unfairly denied payment. Many more are part of a Facebook group of clients who say they are owed money by the company.

“I got an email saying ‘your grant has been approved for $2,132,’” said Josh Franey of Toronto, who lost 40 pounds.

Franey, a graphic designer, says he would not have enrolled in the Dalewood clinic program or paid its $2,600 fee had he not been assured of an 80 per cent refund if he reached his goal.

“I feel they took advantage of my trust, they have zero integrity,” said Franey, who says he is still waiting for a cheque.

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“Days turn into weeks turn into months and I keep getting different runarounds by different people.”

When Global News presented Franey’s case for review, Morgenstern said the company still needed more information from him.

“The doctor has been unwilling or unable to send us the needed record. Josh was invited to contact his doctor and get the needed information but he has not done so,” Morgenstern wrote in an email.

0:47 ‘I am not a scammer’ says Weight Loss Grants director ‘I am not a scammer’ says Weight Loss Grants director

Franey, like many other clients who say they met their goals, believes Weight Loss Grants is intentionally putting up roadblocks to stop paying legitimate claims.

“I’m going to keep coming until I get my money back,” Franey said.

In the television interview, Morgenstern argued “75 per cent of grant claims are not legitimate”, adding clients’ doctors were prepared to falsify information to help patients get rebates.

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“Where we erred was the belief that we believed a doctor in good faith would weigh somebody and the doctor’s credibility wouldn’t be attackable,” Morgenstern said.

Morgenstern claimed he had evidence doctors had provided false information about some clients. He did not supply any.

READ MORE: Weight Loss Grants posts customer health information without consent

As of result of an unexpected number of claims, Morgenstern says Weight Loss Grants had to “put the brakes on” and add new requirements to screen clients who claimed they had lost weight.

“We wanted to pay grants, every time we paid a grant that individual became a walking billboard,” said Morgenstern.

He said Weight Loss Grants has paid out about $800,000 to customers and at one time was paying at a rate of about $50,000 a month.

About 350,000 individuals went on the Weight Loss Grants website to fill out a form to sign up for the program, Morgenstern said.

0:36 Weight Loss Grants director says controversial program was a ‘contest’ Weight Loss Grants director says controversial program was a ‘contest’

He said about 11,000 individuals actually signed up for a weight loss program in order to qualify for the rebate.

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Morgenstern characterized the scheme as a “contest”.

“It was a win, win, win,” he said.

“It’s a contest, it was on our website: it’s a friendly bet.”

The Better Business Bureau (BBB) received several complaints about Weight Loss Grants. It gives the organization an F rating.

Morgenstern was a founder in 2002 of the adult marital cheating website, Ashley Madison. The company’s slogan at the time was “Life is short, have an affair.”

In spring, when defending Weight Loss Grants, Morgenstern used its website to fight back at clients who came forward to complain. Some of that information included releasing clients’ names and their weight loss goals.

“I’m apologizing for any misconduct where people may have felt their personal information was put out there,” Morgenstern said.

He also said it was improper to post false information about a Global News journalist reporting on the company’s conduct.

“We apologize to you, it wasn’t right to push back at you,” Morgenstern said.

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READ MORE: Better Business Bureau warns of weight loss grant program

But some former clients, including Minas, say they don’t accept Morgenstern’s defences.

“It’s a scam, it’s a complete scam,” she said.

“I want my money back, period.”

Franey says he will keep fighting for the refund he was promised.

“They took advantage of my trust.”