According to the documentation:
Cautious system administrators may want only a few select system users to be able to connect to their proftpd server--all other users are to be denied access. The LOGIN command group is designed for just this scenario:
<Limit LOGIN> AllowUser barb AllowUser dave AllowGroup ftpuser DenyAll </Limit>
This allows the users barb and dave, as well as any user in the ftpuser group, to login. All other users will be denied.
You need to use the DenyAll clause right after AllowGroup ftpuser