One veteran scammed over $700,000 and a Purple Heart in a rising wave of benefits fraud

More than 25 years of war in Iraq and Afghanistan have fundamentally changed the size and makeup of the U.S. veterans' population. The Department of Veterans Affairs says Gulf War-era veterans — which it defines as those who served at anytime between the start of Operation Desert Shield in 1990 and the present day — are now the largest group of veterans, comprising nearly half the veteran population, and outstripping Vietnam veterans by more than 600,000.

The changing makeup of the veteran population — including a larger percentage of younger veterans — is also changing the nature of fraud involving the veteran community. The VA's Office of Inspector General reports that between last April and October alone, its Office of Investigations made 80 arrests, and recovered $2.9 million in restitution, fines and penalties relating to things like VA health-care benefits fraud. That is more than twice the amount recovered in the same period a decade ago.

Among the most egregious cases in recent years involved former Idaho National Guard Lt. Darryl Wright, who admitted in 2016 to scamming state and federal governments out of more than $700,000 in benefits — not to mention a Purple Heart — by lying about injuries he claimed to have suffered while serving in Iraq.

Special Agent Joe Rogers with the Social Security Administration's Office of the Inspector General, who investigated Wright's disability claims, found what investigators would later call "a tale of two Darryls."

"Mr. Wright first filed in 2010, and he told Social Security that his disabilities were pretty severe," Rogers told CNBC's "American Greed," "that he couldn't get out of bed several days a week, he had trouble walking, he used a cane, he couldn't feed himself, he couldn't tie his shoes, he couldn't manage his belt, button his pants."

But undercover surveillance showed Wright doing yardwork outside his home in Snoqualmie, Washington, and coming and going without the use of so much as a cane. Security video even showed him getting into a bar fight.

And his lies went beyond disability claims. Wright used his concocted injury story to apply for two medals — the Army's Combat Action Badge and the Purple Heart — even using the name of a fellow soldier, Sgt. Brad Aune, to try and bolster his claims.

"I was furious," Aune told "American Greed." "We really did a hell of a good job as far as I'm concerned while we were in Iraq and to have someone throw our good name under the bus and just start creating all these documents with my name on them — 99.9 percent of that stuff is not true."

Today, Aune works full time as a veterans' advocate and counselor in Fargo, North Dakota, part of a growing network of vets and veteran groups trying to fill gaps left by the beleaguered VA.

One such organization is the Texas-based Green Beret Foundation, which says it has provided support for more than 2,500 veterans of the Army Special Forces since the organization was founded nearly a decade ago. Increasingly, the foundation is also fielding complaints about so-called stolen valor cases not unlike Wright's scam.

"Really, what we're trying to do is we're working to educate the public," said Lyle Hendrick, a former Green Beret and a private investigator who serves as an ambassador for the foundation. "The stolen valor acts that these people commit are just inexcusable."

Veterans' advocates say stolen valor is more than just repugnant. It can also sap vital benefits from veterans who truly need it.

"The VA and the pot of money, it's a limited amount," Hendrick said. "So those programs that they are supposed to be sponsoring, the benefits that they're supposed to be giving to legitimate veterans, doesn't always make it to them."

A U.S. soldier in Afghanistan
Lucas Jackson | Reuters
A U.S. soldier in Afghanistan

"You get a broken wheel like Darryl Wright, that screws it up for the rest of us," Aune said.

Wright might have been able to continue the scam for much longer were it not for a supervisor at the federal agency where he worked. After reporting her suspicions about Wright, C.J. Jackson found herself under fire for allegedly violating the privacy of a disabled veteran. She was eventually vindicated, but not before racking up, she says, hefty legal bills and untold stress.

Even so, Hendrick urges employers to report suspected fraud to authorities. One way is via the VA Office of Inspector General hotline, staffed weekdays between 8:30 a.m .and 2 p.m. Eastern time, at 1-800-488-8244.

Hendrick also urges people to take the time to learn about military culture, not only as a way to spot potential fraud, but also to understand why veterans, by and large, are such a special breed.

"We really like talking to groups, people that don't know, well, what is a Green Beret and how are they different from the Rangers," he said. "Because when you look at the history of the U.S. Special Forces, and look at the number of warriors that have received the Medal of Honor for actions on the battle field, that in itself is impressive."

Darryl Wright, sentenced to three years in prison and stripped of his medals, is an exception to the rule. And while he has been ordered to pay more than $600,000 in restitution, it is clear he stole more than just money from his brothers on the battlefield.

Go inside the double life of Darryl Wright, and see how authorities finally bring him down, on the next all-new episode of "American Greed," Monday, March 26, at 10 p.m. ET/PT on CNBC.