Wow Dan, if what that guy did to you is true, it is absolutely
despicable.
Forget about reporting him to another judge -- they may be involved with bribery too. Also forget about reporting him to a higher modelling authority; it'll turn out to be nothing more than a "he-said, I-said."
If I had been thinking quick enough in that situation, here's what I would have done: Raise your voice to make a little announcement to everyone in the room about this judge's offer. Now, since everyone's sense of fair play is threatened, he has about a dozen ticked-off modelers angry with him instead of just you, and you have now publicly disgraced him. Hopefully he'll be stared down by all as he leaves the contest that day -- never judging a thing.
Back to the sand issue -- yeah, screw the competition judges if your granules aren't "to scale." I like the filtering suggestion to get the finest particles, but, another idea may be to use something like talcum powder. This would need adhesive or glue to really fix it together, but it might be more "to scale," and besides, a lot of the high traffic areas in the desert sand gets a consistency of powder, literally.