B2 - there's nothing wrong here.
The hours were logged under FAA regs quite legitmately - the problem was going to an FAA school in Arizona who either don't know or don't care about the regulations when logging time towards a JAA licence or rating - which is what the customer ultimately wanted.
The examiner for the CPL test (if he did bother to check at all - which I doubt) only need to look for minimum total flight hours of 150 before starting the course, number of dual hours flown on the course and evidence of having completed all the requirements for the JAA night qualification.
I do find it sad that the two schools involved allowed it to happen - but what has happened is a quite legitimate rip-off.
Afraid it's another case of "buyer beware" and observation of aviation rule number two...."It's YOUR responsibility to make sure it's right".
(Rule one? Don't fly into anything hard.)