Freud, dead, dismally deceived (9)

I believe the answer is:

defrauded

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'dismally deceived' is the definition.
The definition and answer can be both to do with social activities as well as being past participle verbs.
Maybe you can see a link between them that I can't see?

'freud dead' is the wordplay.
'freud dead' can be anagrammed to 'DEFRAUDED'.
But, I am not clear how this is indicated.

Can you help me to learn more?

(Other definitions for defrauded that I've seen before include "Swindled" , "Cheated (of cash)" .)

I've seen this clue in the Sydney Morning Herald.

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