Agreed, the punishment is rather lax. I'm not really sure it conflicts with "freedom of speech" in any way, as one is free to say what they will. However, lying can have consequences, and if the lie is made in an attempt to gain fame, fortune, or power by making false claims which are clearly known to be false and attempting to garner support by actions and/or service which never took place - there should be consequences. The hardest part would be the enforcement, as you'd need evidence both that the claim was made, that it was made with intent to defraud, and that there is a clear goal to benefit from doing so (ref #1).
Claiming service and actions that never happened could mean that the lying person gets a job, contract, service, reward, or other gain instead of other individual(s) who are honest, hard-working people who never served, or perhaps served and did not receive any medals, who are overlooked due to preference for hiring veterans. That's taking something from someone who has earned a right that the liar has simply lied their way into. Having multiple family members who served with US Armed Forces and were honorably discharged - I have a grievous issue with those that would simply claim the honor of doing that which they have not.
In short, freedom OF speech is not the same as freedom FROM speech. Walk into a biker bar, tell the biggest, burliest guy you see about the terrible things you did to his mother/wife/daughter - you're free to do so, but that won't keep you free from his attempts (or success) at making you own up to your words. "Stupid should hurt", as I've heard it said many times. Seems like people keep feeling entitled to complete protection from anything and everything, no matter what they do, smart or stupid, moral or immoral, legal or illegal.
As to what, if any, gain was to be had from the case in the article, I don't know. It's missing a lot of information and I'd need to know more before calling his actions criminal or just stupid.
(ref #1) - People who are doing re-enactments, in stage shows, halloween parties, etc, that are portraying a "character" should obviously be known to be doing as such.