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112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-650

======================================================================



 
                        STOLEN VALOR ACT OF 2012

                                _______
                                

 September 10, 2012.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Smith of Texas, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1775]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 1775) to amend title 18, United States Code, to establish 
a criminal offense relating to fraudulent claims about military 
service, having considered the same, report favorably thereon 
with amendments and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page

The Amendments...................................................     1
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     5
Committee Oversight Findings.....................................     5
New Budget Authority and Tax Expenditures........................     5
Congressional Budget Office Cost Estimate........................     5
Performance Goals and Objectives.................................     6
Advisory on Earmarks.............................................     7
Section-by-Section Analysis......................................     7
Changes in Existing Law Made by the Bill, as Reported............     7

                             The Amendments

  The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stolen Valor Act of 2012''.

SEC. 2. FRAUDULENT REPRESENTATIONS ABOUT RECEIPT OF MILITARY 
                    DECORATIONS OR MEDALS.

    (a) In General.--Section 704 of title 18, United States Code, is 
amended--
            (1) in subsection (a), by striking ``wears,''; and
            (2) so that subsection (b) reads as follows:
    ``(b) Fraudulent Representations About Receipt of Military 
Decorations or Medals.--Whoever, with intent to obtain money, property, 
or other tangible benefit, fraudulently holds oneself out to be a 
recipient of a decoration or medal described in subsection (c)(2) or 
(d) shall be fined under this title, imprisoned not more than one year, 
or both.''.
    (b) Addition of Certain Other Medals.--Section 704(d) of title 18, 
United States Code, is amended--
            (1) by striking ``If a decoration'' and inserting the 
        following:
            ``(1) In general.--If a decoration'';
            (2) by inserting ``a combat badge,'' after ``1129 of title 
        10,''; and
            (3) by adding at the end the following:
            ``(2) Combat badge defined.--In this subsection, the term 
        `combat badge' means a Combat Infantryman's Badge, Combat 
        Action Badge, Combat Medical Badge, Combat Action Ribbon, or 
        Combat Action Medal.''.
    (c) Conforming Amendment.--Section 704 of title 18, United States 
Code, is amended in each of subsections (c)(1) and (d) by striking ``or 
(b)''.

    Amend the title so as to read:

      A bill to amend title 18, United States Code, with 
respect to fraudulent representations about having received 
military decorations or medals.

                          Purpose and Summary

    H.R. 1775 amends the Federal criminal code to subject those 
who, with intent to obtain money, property, or other tangible 
benefit, fraudulently hold themselves out to be a recipient of 
certain military decorations to a fine or up to 1 year in 
prison. The bill limits the application of this penalty to 
fraudulent claims related to only the Congressional Medal of 
Honor and those decorations or medals listed in subsection (d) 
of section 704 of Title 18. The bill amends subsection (a) of 
704 to remove the term ``wears'' and amends subsection (d) of 
704 to add ``combat badges'' and a definition of such term to 
the list of decorations and medals.

                Background and Need for the Legislation

    Congress enacted the Stolen Valor Act of 2005 to expand the 
existing prohibition against wearing, manufacturing, or selling 
military decorations or medals without legal authorization. The 
Act imposed penalties for falsely representing oneself as a 
recipient of any medal or honor authorized by Congress for the 
armed services and imposed increased penalties for violations 
involving the Congressional Medal of Honor, a distinguished 
service cross, an Air Force Cross, a Navy Cross, a silver star, 
or a purple heart.
    The Act responded to a proliferation of false claims by 
imposters claiming to be decorated war heroes. In Illinois, one 
man attended numerous Marine Corps functions, military 
funerals, and fund-raisers posing as a retired Marine Corps 
colonel. He claimed to have been awarded the Purple Heart eight 
times, the only Marine to earn such distinction, as well as the 
Navy Cross. It turns out he never served a single day as a 
Marine.
    In St. Louis, Federal authorities arrested a man at a local 
Marine Corps event who claimed to be a decorated officer. He 
had previously been spotted at the annual Marine Corps birthday 
ball wearing the Navy Cross, two Silver Stars, four Bronze 
Stars, along with numerous other medals. He too has never 
served a single day as a Marine.
    In 2003, 642 Virginia residents falsely indicated on tax 
forms to be the recipient of a Medal of Honor, which afforded 
them an exemption from state tax on military retirement 
income.\1\ This despite the fact that, at the time, there were 
only four living Medal of Honor recipients in Virginia and 132 
nationwide.
---------------------------------------------------------------------------
    \1\Colimore, Pinning Crime on Fake Heroes: N. J. Agent Helps Expose 
and Convict Those with Bogus U.S. Medals, Philadelphia Inquirer, Feb. 
11, 2004, available at http://articles.philly.com/2004-02-11/news/
25374213_1_medals-military-imposters-distinguished-flying-cross.
---------------------------------------------------------------------------
    In 2006, the Justice Department and Department of Veterans' 
Affairs Office of Inspector General launched Operation Stolen 
Valor--a year-long operation that culminated in a number of 
arrests and convictions. In the Northwest, a dozen cases 
resulted in fraud totals of more than $1.4 million.\2\
---------------------------------------------------------------------------
    \2\Northwest Crackdown on Fake Veterans in ``Operation Stolen 
Valor,'' U.S. Dept. of Justice, Sept. 21, 2007, available at http://
www.justice.gov/usao/waw/press/2007/sep/operationstolenvalor.
html.
---------------------------------------------------------------------------
    Perhaps the most egregious example of this fraud was 
perpetrated by a 10-year Marine Corps sergeant who secured $66 
million in security contracts from the military based upon 
fictitious combat experience in Panama and Somalia and 
fabricated Silver Stars, Purple Hearts, Bronze Stars and Air 
Medals. Upon learning of the man's non-existent combat record, 
the military revoked the contracts but by then the sergeant had 
fled the United States for Australia.\3\
---------------------------------------------------------------------------
    \3\Ross, Marine With Phony Record Dupes Pentagon, ABC News, July 7, 
2004, available at http://abcnews.go.com/WNT/Investigation/
story?id=131753&page;=1#.UBbMdqC8heg.
---------------------------------------------------------------------------
    On June 28, 2012, the Supreme Court struck down the Stolen 
Valor Act as unconstitutional under the First Amendment. 
Justice Kennedy, writing for the majority, described the Act as 
a law that ``targets falsity and nothing more.''\4\ The simple 
act of lying--even about receipt of a military decoration--is, 
by itself, protected speech. ``The Court has never endorsed the 
categorical rule the Government advances: that false statements 
receive no First Amendment protection.''\5\
---------------------------------------------------------------------------
    \4\United States v. Alvarez, 567 U.S. ___, Slip Op. 11-210 at 7 
(June 28, 2012).
    \5\Id.
---------------------------------------------------------------------------
    Rather, ``content-based restrictions on speech have been 
permitted, as a general matter, only when confined to the few 
`historic and traditional categories [of expression] long 
familiar to the bar'''.\6\ These include speech intended--and 
likely--to incite violence, obscenity, defamation, speech 
integral to criminal conduct, so-called ``fighting words,'' 
child pornography, fraud, true threats, and speech presenting a 
grave and imminent threat the government has the authority to 
prevent.\7\
---------------------------------------------------------------------------
    \6\Id. at 5.
    \7\Id.
---------------------------------------------------------------------------
    The Court acknowledged a legitimate government objective in 
honoring valor by our military men and women. ``It is right and 
proper that Congress, over a century ago, established an award 
so the Nation can hold in its highest respect and esteem those 
who, in the course of carrying out the `supreme and noble duty 
of contributing to the defense of the rights and honor o the 
nation,' have acted with extraordinary honor. And it should be 
uncontested that this is a legitimate Government objective, 
indeed a most valued national aspiration and purpose.''\8\
---------------------------------------------------------------------------
    \8\Id. at 2-3 (citation omitted).
---------------------------------------------------------------------------
    Although the ``Government's interest in protecting the 
integrity of the Medal of Honor is beyond question . . . 
``[t]here must be a direct causal link between the restriction 
imposed and injury to be prevented.''\9\ And harm to the status 
of a military decoration or to its true recipients is not 
sufficient to overcome the deference afforded protected speech 
under the First Amendment.\10\
---------------------------------------------------------------------------
    \9\Id. at 13.
    \10\Id. at 14.
---------------------------------------------------------------------------
    The Court does describe, however, instances in which a 
false claim of military honors would extend beyond the 
protections of the First Amendment. ``Where false claims are 
made to effect a fraud or secure moneys or other valuable 
considerations, say offers of employment, it is well 
established that the Government may restrict speech without 
affronting the First Amendment.''\11\
---------------------------------------------------------------------------
    \11\Id. at 11.
---------------------------------------------------------------------------
    In his concurrence, Justice Breyer builds upon the concept 
hinted to by the majority that false claims made in furtherance 
of fraud would be unprotected and, therefore, appropriately 
subject to government restriction. Justice Breyer identified 
several modifications to narrow the application of the Act, 
including: (1) require knowledge of falsity, (2) identify those 
medals Congress is most interested in protecting, and (3) limit 
the statute to those lies most likely to cause harm.\12\
---------------------------------------------------------------------------
    \12\Alvarez, Slip Op. 11-210, Breyer, J. concurring opinion at 9.
---------------------------------------------------------------------------
    The substitute amendment adopted by the Committee during 
markup rewrites subsection (b) of section 704 to make it a 
crime to fraudulently hold oneself out to be a recipient of the 
Congressional Medal of Honor or other enumerated military 
decoration with the intent to obtain money, property or other 
tangible benefit. The term ``fraudulently'' incorporates the 
necessary knowledge requirement. Black's Law Dictionary defines 
``fraud'' as ``a knowing misrepresentation of the truth or 
concealment of a material fact to induce another to act to his 
or her injury.''\13\
---------------------------------------------------------------------------
    \13\Black's Law Dictionary 267 (6th ed. 1991).
---------------------------------------------------------------------------
    The amendment adds an additional element of specific 
intent, namely that the fraud was committed for the purpose of 
obtaining money, property or other tangible benefit. The term 
tangible benefit is intended to cover those ``valuable 
considerations'' beyond money or property, such as offers of 
employment, which Justice Kennedy identified as appropriately 
prohibited benefits to a fraud.\14\ The amendment limits the 
application of the 1-year penalty to false claims involving the 
Medal of Honor and those military decorations and medals listed 
in the statute, such as the Navy Cross, Silver Star and Purple 
Heart. The amendment adds ``combat badges'' to the list of 
decorations and medals protected under the Stolen Valor Act.
---------------------------------------------------------------------------
    \14\Alvarez, 567 U.S. ___, Slip Op. 11-210 at 11.
---------------------------------------------------------------------------
    During oral argument, Justices Kennedy and Ginsburg 
challenged the statute's prohibition on the unauthorized 
wearing of a military medal. If one wears a military medal--
even if he or she is not the recipient of such medal--is it any 
less expressive speech and any less protected than a false 
claim? Although the Court does not affirmatively address this 
issue in its ruling, it's clear from the argument that this 
type of expressive conduct is very likely to enjoy First 
Amendment protection. The amendment, therefore, strikes 
``wears'' from subsection (a) of section 704. It does so with 
the confidence that the act of fraudulently wearing a military 
medal to obtain money, property or other tangible benefit will 
continue to be prohibited under the revised subsection (b).

                                Hearings

    There were no hearings held on H.R. 1775.

                        Committee Consideration

    On August 1, 2012, the Committee met in open session and 
ordered the bill H.R. 1775 to be reported favorably with an 
amendment in the nature of a substitute, by voice-vote, a 
quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that no 
roll-call votes occurred during the Committee's consideration 
of H.R. 1775.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 1775, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 23, 2012.
Hon. Lamar Smith, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1775, the ``Stolen 
Valor Act of 2012.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz, who can be reached at 226-2860.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member




                  H.R. 1775--Stolen Valor Act of 2012.

      As ordered reported by the House Committee on the Judiciary 
                           on August 1, 2012.




    CBO estimates that implementing H.R. 1775 would have no 
significant cost to the Federal Government. Enacting the bill 
could affect direct spending and revenues; therefore, pay-as-
you-go procedures apply. However, CBO estimates that any 
effects would be insignificant for each year.
    H.R. 1775 would make changes to the current Federal 
offenses relating to fraudulent claims about military service. 
As a result, the government might be able to pursue cases that 
it otherwise would not be able to prosecute. CBO expects that 
H.R. 1775 would apply to a relatively small number of 
additional offenders, however, so any increase in costs for law 
enforcement, court proceedings, or prison operations would not 
be significant. Any such costs would be subject to the 
availability of appropriated funds.
    Because those prosecuted and convicted under H.R. 1775 
could be subject to civil and criminal fines, the Federal 
Government might collect additional fines if the legislation is 
enacted. Civil and criminal fines are recorded as revenues. 
Criminal fines are deposited in the Crime Victims Fund and 
later spent. CBO expects that any additional revenues and 
direct spending would not be significant because of the 
relatively small number of cases likely to be affected.
    H.R. 1775 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of State, local, or tribal governments. The bill 
contains a new private-sector mandate as defined in UMRA by 
prohibiting individuals from claiming to have received a 
military medal or decoration with intent to obtain money, 
property, or other tangible benefits. CBO estimates that the 
cost of the mandate to such individuals would fall below the 
annual threshold established in UMRA ($146 million in 2012, 
adjusted annually for inflation).
    The CBO staff contacts for this estimate are Mark Grabowicz 
(for Federal costs) and Elizabeth Bass (for the private-sector 
impact). The estimate was approved by Peter H. Fontaine, 
Assistant Director for Budget Analysis.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
1775 ensures the integrity of certain medals awarded to 
military heroes by reinstating a penalty for misrepresenting 
the receipt of those medals.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 1775 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

Section 1. Short Title.
    This section cites the short title of the Act as the 
``Stolen Valor Act of 2012.''
Section 2. Fraudulent Representations about Receipt of Military 
        Decorations or Medals.
    This section amends subsection (b) of 704 to rewrite the 
provision to prohibit fraudulently holding oneself out to be a 
recipient of certain military decorations or medals with the 
intent to obtain money, property or other tangible benefit. 
This section limits the application of this penalty to 
fraudulent claims related to only the Congressional Medal of 
Honor (as that term is defined in subsection (c) of 704) and 
those decorations or medals listed in subsection (d) of 704.
    This section amends subsection (a) of 704 to remove the 
term ``wears'' and amends subsection (d) of 704 to add ``combat 
badges'' and a definition of such term to the list of 
decorations and medals.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                      TITLE 18, UNITED STATES CODE

PART I--CRIMES

           *       *       *       *       *       *       *


CHAPTER 33--EMBLEMS, INSIGNIA, AND NAMES

           *       *       *       *       *       *       *


Sec. 704. Military medals or decorations

    (a) In General.--Whoever knowingly [wears,] purchases, 
attempts to purchase, solicits for purchase, mails, ships, 
imports, exports, produces blank certificates of receipt for, 
manufactures, sells, attempts to sell, advertises for sale, 
trades, barters, or exchanges for anything of value any 
decoration or medal authorized by Congress for the armed forces 
of the United States, or any of the service medals or badges 
awarded to the members of such forces, or the ribbon, button, 
or rosette of any such badge, decoration or medal, or any 
colorable imitation thereof, except when authorized under 
regulations made pursuant to law, shall be fined under this 
title or imprisoned not more than six months, or both.
    [(b) False Claims About Receipt of Military Decorations or 
Medals.--Whoever falsely represents himself or herself, 
verbally or in writing, to have been awarded any decoration or 
medal authorized by Congress for the Armed Forces of the United 
States, any of the service medals or badges awarded to the 
members of such forces, the ribbon, button, or rosette of any 
such badge, decoration, or medal, or any colorable imitation of 
such item shall be fined under this title, imprisoned not more 
than six months, or both.]
    (b) Fraudulent Representations About Receipt of Military 
Decorations or Medals.--Whoever, with intent to obtain money, 
property, or other tangible benefit, fraudulently holds oneself 
out to be a recipient of a decoration or medal described in 
subsection (c)(2) or (d) shall be fined under this title, 
imprisoned not more than one year, or both.
    (c) Enhanced Penalty for Offenses Involving Congressional 
Medal of Honor.--
            (1) In general.--If a decoration or medal involved 
        in an offense under subsection (a) [or (b)] is a 
        Congressional Medal of Honor, in lieu of the punishment 
        provided in that subsection, the offender shall be 
        fined under this title, imprisoned not more than 1 
        year, or both.

           *       *       *       *       *       *       *

    (d) Enhanced Penalty for Offenses Involving Certain Other 
Medals.--[If a decoration]
            (1) In general.--If a decoration or medal involved 
        in an offense described in subsection (a) [or (b)] is a 
        distinguished-service cross awarded under section 3742 
        of title 10, a Navy cross awarded under section 6242 of 
        title 10, an Air Force cross awarded under section 8742 
        of section 10, a silver star awarded under section 
        3746, 6244, or 8746 of title 10, a Purple Heart awarded 
        under section 1129 of title 10, a combat badge, or any 
        replacement or duplicate medal for such medal as 
        authorized by law, in lieu of the punishment provided 
        in the applicable subsection, the offender shall be 
        fined under this title, imprisoned not more than 1 
        year, or both.
            (2) Combat badge defined.--In this subsection, the 
        term ``combat badge'' means a Combat Infantryman's 
        Badge, Combat Action Badge, Combat Medical Badge, 
        Combat Action Ribbon, or Combat Action Medal.

           *       *       *       *       *       *       *