I see threads here all the time from people who are either concerned with getting the "fraudulent clicks" letter, or they've gotten them and now want to know how to get back in.
I am one of a handful of people (that I'm aware of) who have had my account knocked out for invalid clicks and been reinstated a couple of months later.
So, here's a little tip guide primer on what to expect and what to do.
A) You will not receive any check that is currently unprocessed. Consider that payment forfeited (and don't threaten google with a lawsuit to recover it - it will just make things much, much worse).
B) Do confess to them any and all circumstances where you might have screwed up. If you didn't screw up and are genuinely baffled you will need your server logs to locate suspicious activity. I highly recommend getting click tracking software to monitor your ads for exactly this scenario. If you don't have server logs or tracking software, YOU are at fault by default.
C) The account disabling was both automated and then verified manually. Google examines the location of where clicks were coming from. If they see that too many clicks are from the same geographic area as where they send your check (or the ip you log in from) that sets off a red flag. Competitors clicking on your ads is something Google is well aware of and can track as well (they know their geographic area too)
To get your account reinstated:
A) Write google an apology and discuss steps you've taken so the situation won't arise in the future. Don't avoid blame, even if you knew nothing about what your friends were doing when they decided to "help" you by clicking on your ads. The fact is, by revealing information about how you make money to someone else, you are setting yourself up for this situation. I'm not being judgemental, just telling you how Google sees it. In your letter to them, recognize and admit this.
B) Offer to make good on any fraudulent clicks. They won't take you up on it, but they will know that you are genuinely sorry and want to keep their business.
C) Contact someone at google directly. Don't just send off a random email to email@example.com. Go to a webmasterworld conference. Meet someone in their company. Use that In when the conference is over. Worst case scenario, BUY an In into the company. Does someone you know have an In there? Offer to pay them to to speak to their In on your behalf. A big adwords spender with a personal ad rep is a good place to begin.
D) Seek out text ad competition immediately. Even if the ads aren't as high-paying as Googles (and they won't be), it will break the sting of losing all of your income until Google does come back around to review your case.
E) Be persistent, but polite. Send a letter (a new one) once a week. Keep reiterating your loyalty to their program and how you are prepared to write letters forever until they will understand you are committed to following their rules if they will reaccept you.
Now for the bad news....
None of this will probably help. To be reviewed for readmission, your site must be large enough that the revenue is worth a potentially risky business move.
If they don't answer your letters anymore and all hope is lost, you are now left with basically one recourse assuming you really want to be in their program: Change your domain name, bank account, IP address, ISP and site design. Wait two months, then take on a partner you trust. Reapply for the program under this new partner's name and address, (now especially possible given Google's automatic deposit program). Learn from your mistakes and never do anything that can potentially result in your ads being clicked on fraudulently again. So, really, get a partner you can trust will not click as well.
To anyone else who hasn't been kicked out yet and never wants to be:
A) Shut up about how you make money when talking to friends and family. Let them privately think you run a bestiality porn site or something. It's still better than them clicking on your ads
B) Disable ads for your own ip and local geographic region, if you have access to that data and it won't hurt your business. Ditto with your competition's ip address. If you don't know it, write him an email pretending to be a customer and look at his return headers.
C) Get click-monitoring software and check it daily. Be vigilant in notifying Google about what YOU think is fraud, even if they don't. Your notifications to them will come in especially handy should your account ever be flagged by them. You'll be remembered as honest.
D) Think of Google for the long term, not the short term. So you're having a bad month and think clicking on an ad you might be interested in anyway doesn't hurt anyone? You're wrong. This month might be bad. Next month will be good. Google revenue is about long term averages. Is a few cents click worth the loss of thousands of dollars in the long term? Definitely not.
Take it from me, I've been there, been put out on the street, and eventually been reaccepted (after a lot of hard work). It can and does happen to any of us. Just make sure the odds of it happening to you are as slim as possible.