My site used to be listed first or second on every search engine results including Google until I started placing adword ads. Now, I am still first or second in all the other search engine except Google where I am consistently on the third page. I did some random searches in Google using other search words and it seems that any site with ads on adwords are never on the first page. Is Google penalizing sites with adword ads to make make more money in clicks?

I doubt it.

LostInSpace, I can assure you there is no connection at all between AdWords and the Search results.

My site used to be listed first or second on every search engine results including Google until I started placing adword ads. Now, I am still first or second in all the other search engine except Google where I am consistently on the third page. I did some random searches in Google using other search words and it seems that any site with ads on adwords are never on the first page. Is Google penalizing sites with adword ads to make make more money in clicks?

I have 60 terms at number 1 spot and 140+ on front page for organics... I also use ppc... I think the recent backlink update caused the drop...