The non-custodial father who has not paid child support may have claimed exemption for 2015. He was not entitled for 2015 and not for 2016.
There is no way to prevent someone from claiming a dependent improperly. All you can do is file your tax return with the exemptions that you are entitled to, and respond to the IRS letter when it comes.
Consider arranging your finances so that you owe a small amount of tax at the end of the year, instead of getting a refund. Then you won't have to worry about having a refund delayed by a conflict over claiming a dependent.
If you filed a form 14039 for the fraud then the IRS should issue an IP PIN to use on your return to prevent this from future uses ... <a rel="nofollow" target="_blank" href="https://www.irs.gov/individuals/the-identity-protection-pin-ip-pin?_ga=1.157544250.1249668380.1417622548">https://www.irs.gov/individuals/the-identity-protection-pin-ip-pin?_ga=1.157544250.1249668380.1417622548</a>
The IRS does issue IP PINs for dependents. I don't know under what circumstances they do that. It might be worth filing Form 14039 on behalf of the grandson.
@rkal302605 - You could call the IRS Identity Protection Specialized Unit at 800-908-4490 and ask them if you can get an Identity Protection PIN for your grandson, or if there is something else they can do to help you.
You can still file an amended return for 2015 and claim your grandson.
A child closely related to a taxpayer can be a “Qualifying Child (QC)” dependent, regardless of the child's income, if:
1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
2. He did not provide more than 1/2 his own support
3. He lived with the relative (including temporary absences) for more than half the year
4. He is younger than the relative (not applicable for a disabled child)
5. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child (this essentially means that you have the parent’s permission to claim the child, if the child also lived with the parent more than half the year). The child is not the QC of a non-custodial parent
6. If the parents of a child can claim the child as a qualifying child but no parent so claims the child, no one else can claim the child as a qualifying child unless that person's adjusted gross income (AGI) is higher than the highest AGI of any of the child's parents who can claim the child.