Click in the Eyewitness News Story Window above to watch Lisa Hernandez's report from the federal courthouse in downtown Los Angeles.
When Alvarez joined the board he was asked to say a few words about himself. He told members he was a retired Marine who had received the Congressional Medal of Honor.
"I'm a retired Marine of 25 years. I retired in the year of 2001. Back in 1987, I was awarded the Congressional Medal of Honor. I got wounded many times by the same guy. I'm still around," claimed Alvarez.
He also talked off the record to colleagues about his "so-called" military experience.
"He said he was decorated and had been shot sixteen times and had been in three helicopter accidents," explains Bob Kuhn from the Three Valleys Municipal Water Board.
None of it was true. Alvarez never received a Congressional Medal of Honor, in fact he never was a Marine.
He now faces federal charges under the 2005 Stolen Valor Act, which protects against bogus claims of military decorations.
Now, veterans and many others are angry. ABC's Brian Rooney confronted Alvarez about this claims.
"You don't have the Medal of Honor and you claim that you do," said Rooney.
"It's not that, it got all miswritten," said Alvarez.
"Do you have the Medal of Honor?" asked Rooney.
"No, I don't," said Alvarez. "When I explained myself, I explained myself incorrectly. People took it out of context."
Alvarez reportedly told a similar story six years ago while running for mayor in Pomona.
He has refused to resign his position with the water district despite facing angry veterans at every meeting in Claremont.
The penalty is a year in prison for each conviction.
Only about 100 men are alive who have won the Medal of Honor, then- acting U.S. Attorney George Cardona said last year.
CNS contributed to this report.