Mr. Strandlof’s case is the latest legal challenge to the Stolen Valor Act. The appellate court’s ruling in Colorado — expected in the next few months — is being eagerly awaited by legal experts and veterans groups, as it will most likely determine whether the United States Supreme Court takes up the matter.

“Stolen Valor is not just lying: it is stealing an identity of a combat hero or a wounded soldier,” said Doug Sterner, a Vietnam veteran who helped draft the law’s language and who has spent years tracking down those who falsely claim to be war heroes. “Why should the Army give out a Silver Star to someone who performs heroically if anybody who wants one can buy a medal, print a citation and claim it with impunity?”

Since Congress passed the Stolen Valor Act, the Justice Department has prosecuted more than 60 people for violating it — penalties can range from up to a year in prison to fines and community service. Mr. Sterner says thousands of cases are reported each year.

But the recent challenges have left the law’s future uncertain.

Last year, the United States Court of Appeals for the Ninth Circuit ruled the law unconstitutional in the case of Xavier Alvarez, a former board member for a municipal water district near Los Angeles. Mr. Alvarez had bragged about being wounded in combat and claimed he had received the Medal of Honor. In truth, he never served in the military.

In 2008, Mr. Alvarez pleaded guilty on the condition that he could appeal. He was sentenced to three years of probation, ordered to perform 416 hours of community service and fined $5,000. But the appeals court reversed his conviction, ruling in a 2-to-1 decision that the false statements covered under the act were overly broad.

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In the majority opinion, Judge Milan D. Smith Jr. wrote that if the court upheld the act, “then there would be no constitutional bar to criminalizing lying about one’s height, weight, age or financial status on Match.com or Facebook, or falsely representing to one’s mother that one does not smoke.”

But a federal judge in Virginia upheld the law in January in the case of Ronnie L. Robbins, a former revenue commissioner of Dickenson County who had claimed while campaigning that he was a decorated Vietnam veteran. Mr. Robbins, in fact, was never deployed overseas while in the Army.

In his ruling, the judge, James P. Jones, said that lying about being a decorated soldier did not warrant First Amendment protection, and that privacy laws would be sufficient to keep the government from intruding into everyday exaggerations. In March, a jury found Mr. Robbins guilty, and he is scheduled for sentencing in July.

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With such divergent rulings, eyes are turned toward the case of Mr. Strandlof, whose tales were so convincing he was able to start his own veterans group.

Oral arguments before the federal appeals court here in Denver were heard last week. Mr. Strandlof’s federal public defender, John T. Carlson, has said that false statements covered by the law could not be grouped with other free speech exceptions like defamation, fraud and perjury. If Stolen Valor is upheld, he argued, the government could find itself regulating any false statements, whether harmful or not.

“For good or bad, we live in a world that tolerates considerable amounts of false speech,” Mr. Carlson wrote in an e-mail response to questions about the case, “from the exaggerations, omissions and little white lies that we all tell sometimes to the big, ideologically inflected lies that dot our culture.”

Conversely, federal prosecutors in the case contend that lying about being a war hero is inherently harmful — to the military awards system and to the soldiers who truly earned their honors. Indeed, proponents of the act maintain that the yarns spun by war fabulists almost always lead to monetary gain or acclaim.

This month, Representative Joe Heck, Republican of Nevada, introduced a revised Stolen Valor Act that would make it a crime of fraud to benefit, or intend to benefit, from lying about military awards.

“It’s not O.K. to misrepresent yourself as a physician and practice medicine,” Mr. Heck said. “It’s not O.K. to misrepresent yourself as a police officer. Why should you be able to misrepresent yourself as member of the military, specifically if you’re trying to gain something of value?”