The fraudulent entry is because we were told in the past that a prior juvenile charge would not need to be disclosed in the future because the charge was dropped / erased. So it was not put on his Army application when we OK'd him to join at 17. The charge came up in the background search and they are not granting waivers right now - so they decided to release him. He never went to basic but did participate in monthly weekend drills (Army NG). He was told he could come back in 6 months to reapply.
"Waivers" are only required with regard to juvenile adjudications (convictions) that are either the equivalent of one "felony" adjudication (like a conviction) or two minor "misdemeanor" adjudications. Army Regulation (AR) 601-270, See table 9-2.
AR 635-200 also permits retention in cases of fraudulent enlistment with a "waiver" under the provisions of Chapter 1, section 14(d). However, unlike most other Army chapter actions, commanders are generally unable to "suspend" the fraudulent enlistment separation (similar to a probation period) to allow the Soldier another chance to prove him or herself. Chapter 1, section 18(a)(1). There is one narrow exception to this rule when the command is willing to "add" an additional basis for separation to the proposed basis of separation: such as, by way of example, "unsatisfactory performance." In that case, a probation period can then be lawfully authorized by the Soldier's chain of command. Chapter 1, section 18(a)(2).
You are correct with regard to "moral waivers" for "serious [juvenile] criminal misconduct" so long as the applicant "had no [other] offenses within 5 years of application for enlistment." AR 601-210, 4-24; see also DD Form 369 and DA Form 2981. Chapter 7 of AR 635-200 pertains to Fraudulent Enlistment cases. Indeed, Soldiers "who concealed a adjudication as a juvenile offender for a felony offense normally will not be considered for retention." 7-17. If the enlistment is "voided" no DD214 will be issued, however, he will have to disclose his "prior service" when he reapplies.
In closing, if not done here, your son could have requested a "waiver" to the General Court-Martial convening authority prior to his discharge. 7-22. Second, he might have also argued that "waiver" was not needed in the first place, however, as mentioned at the outset, this argument assumes no prior "felony" juvenile adjudication and not more than one (1) "misdemeanor" juvenile adjudication. And finally, if he is unable to reenlist into any service, he might consider an appeal to the Army Discharge Review Board.
As you may have figured out by now, this is a complicated process. Good luck.