Is the prayer of one who does not pray – and who may not be ritually pure from masturbation – as an Imam valid?

The default assumption regarding a Muslim's actions is that they are valid. Therefore, the prayer of the man mentioned is valid if he performed the outward obligatory acts of prayer, and your prayer behind him is also valid.

Masturbation is forbidden, based on the Almighty's saying: (And those who guard their private parts Except from their wives or those their right hands possess, for indeed, they will not be blamed – But whoever seeks beyond that, then those are the transgressors).

You should invite this brother to observe prayer and abandon masturbation.