The FBI is the proper law enforcement agency to report this to. They will conduct an investigation and if the allegations are substantiated, they will refer the case to the US Attorney's Office for prosecution.
Read up on the new Obama law - it is the updated Stolen valor act. It is a federal crime for people to pass themselves off as war heroes by wearing medals they didn't rightfully earn. Report the matter to your congressional representative in your congressional district.
You may also want to advise his unit. Be
mindful that he could lose his retirement, etc. GI bill, etc.
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