there is text above the adsense block that sez: "Sponsored Ads" it's not directly telling people to click the ad, but ??? judging by the rest of the website, i think that they are gaming the system.
"Labeling Ads Publishers may not label the ads with text other than "sponsored links" or "advertisements." This includes any text directly above our ads that could be confused with, or attempt to be associated with Google ads." Seems close enough to me.
i did email google last nite, from the goooogle adlink that was coincidentally referenced in this forum today, with my adsense email address... no response, and the site in question still has it's adsense up. the "sponsored ads" text is on a graphical block of another color from the background of the adsense block, so i guess the two can't be viewed as being associated with each other. all the pages look the same, and it looks like they are all linked to each other... just a bunch of meaningless garbage, lol, with lousy seo. i guess that i need to go see how it ranks.
You're splitting hairs as its so close to what Google specifies, I doubt they would anything. This is one case where you should stop trying to report them and get on with working on your own site. Blatantly asking people to click on their ads or changing the code is one thing but emailing Google because they have "Sponsored Ads" instead of "Sponsored Links" is a bit much.