After FBI agents obtained a tape recording of the meeting, federal prosecutors charged Alvarez with two counts of violating the Stolen Valor Act. Alvarez's lawyer argued that the Stolen Valor Act was invalid under the First Amendment and, therefore, the case should be dismissed. The trial court rejected this argument. Alvarez was tried and convicted in the United States District Court for the Central District of California. He was sentenced to probation for three years and ordered to pay a $5,000 fine. He was the first person convicted under the Stolen Valor Act.
Alvarez appealed the First Amendment issue, claiming that the Stolen Valor law violated the First Amendment and, therefore, his conviction was unlawful. A three-judge panel of the United States Court of Appeals for the Ninth Circuit agreed with Alvarez and reversed his conviction, declaring the Stolen Valor Act unconstitutional in a vote of 2-to-1.
The government appealed the case to the Supreme Court of the United States, which agreed to hear it. After the Court agreed to hear the case, the United States Court of Appeals for the Tenth Circuit, ruling in a different case, declared the Stolen Valor Act constitutional in a vote of 2-to-1.
Oral arguments were heard on February 22, 2012.