"The court seems interested in both sides of the argument of whether or not the Stolen Valor Act violated the First Amendment. It's unclear to me which way they might come down," Libby said.

U.S. District Judge Robert E. Blackburn, who made the decision in Denver, rejected the prosecution's claims that lying about having military medals reduces their significance.

"This wholly unsubstantiated assertion is, frankly, shocking and, indeed, unintentionally insulting to the profound sacrifices of military personnel the Stolen Valor Act purports to honor," Blackburn wrote. "To suggest that the battlefield heroism of our servicemen and women is motivated in any way, let alone in a compelling way, by considerations of whether a medal may be awarded simply defies my comprehension."

Strandlof, 32, was charged with five misdemeanors related to violating the Stolen Valor Act. He made false claims about receiving military decorations and posed as a wounded Marine captain named Rick Duncan who received a Purple Heart and a Silver Star, authorities said.

Tiffany Graham, associate professor of law at the University of La Verne, said anything could happen now regarding Alvarez's case.

"The bottom line with respect to these two cases is they're two separate cases in two different jurisdictions where the judges have the authority to interpret the law in two different ways," Graham said.

If there is a split in the decisions, the Supreme Court could get involved, she said.

From reading news reports on the Denver case, Graham said the words "facially unconstitutional" were "pretty big."

"What you're doing is telling Congress, `You need to go back to the drawing board"' with the Stolen Valor Act, Graham said.

"It potentially raises a red flag to folks in Congress" about the legalities of the act.

Rep. John Salazar, a Democrat from Manassa, Colo., who introduced the legislation in 2005, said he was upset about the Colorado decision.

"This is an issue of fraud, plain and simple," he wrote in an e-mail. "The Stolen Valor Act has been upheld by other courts, and I am confident this decision will be overturned on appeal."

Libby said he made his final comments to the 9th Circuit in early November. He said the Denver case statements were "pretty much verbatim" what he had argued before the 9th Circuit.

"I think we're right on the law and the decision from Colorado would seem to suggest we're right on the law," Libby said. "But the three judges from the 9th Circuit will let us know their feelings, so who knows?"

Libby said he did not know when the 9th Circuit would make its decision about Alvarez.

Alvarez was fined $5,000 and sentenced to three years of probation in the 2008 case. Libby said he had completed his community service, which was required for probation, and he was close to finishing up his probation.

Currently, Alvarez is at Centinela State Prison in Imperial County for defrauding the water district, authorities said. He was forced to resign Oct. 1 because he knowingly registered ex-wife Juanita Ruiz for health benefits with the district from Jan. 24 to Oct. 31, 2007, authorities said. Alvarez was sentenced to five years in prison but prosecutors said he would probably serve half of his sentence.

Libby said he was not sure what would happen, if anything, to Alvarez's sentencing if the 2008 case is successfully appealed because the judge would have seen the conviction when handing down punishment.

The Associated Press contributed to this report.