Each year millions in government funds intended to help veterans get back to work go to firms where owners have lied about being disabled vets, according to government watchdogs.

The federal government sets aside billions in contracts each year for companies considered to be service-disabled veteran-owned small businesses (SDVOSB). The program is intended to help returning veterans find employment.

But each year, about $500 million in Veterans Affairs (VA) contracts go to ineligible firms, the VA inspector general’s office has found.

Even after the VA claimed it had increased fraud-prevention controls, the Veterans Affairs inspector general's office found that 1,800 of the companies awarded contracts were not eligible. At least 70 of those firms have been referred for criminal prosecution.

A Government Accountability Office (GAO) case study recently found that just 10 of those firms had illegally received $100 million in SDVOSB contracts.

"GAO found that the government does not have effective fraud-prevention controls in place for the SDVOSB program," the report said. "Specifically, SBA [the Small Business Administration] and agencies awarding SDVOSB contracts do not have processes in place to validate a firm’s eligibility for the program prior to bid submission."

The United States Attorney's Office District of Kansas in June indicted 69-year-old Warren K. Parker, a contributor to the Republican National Committee, for faking an impressive military record to obtain more than $6 million in contracts.

"[H]e falsely claimed to have reached the rank of major in the U.S. Army, completed three tours in Vietnam, to have been awarded three Silver Stars, the Legion of Merit, four Bronze Stars with Valor, eleven Air Medals with Valor (claiming 300 hours of combat air time), three Purple Heart Medals, a Presidential Citation, a U.S. Army Citation, Combat Infantryman's Badge, Vietnam Service Medal with (79) Battle Stars and to have been Awarded over (32) Citations for Heroism," a U.S. Attorney's Office press advisory explained.

While Parker did serve in the Missouri National Guard for five years, he was honorably discharged in 1968 without ever leaving the state. His only decoration was a shooting badge.

"These contracts are supposed to go to genuine service-disabled veteran owned small businesses, not to imposters who break the rules and scheme to beat the system," U.S. Attorney Barry Grissom said. ""If we fail to hold these firms accountable we will be sending a message to unscrupulous members of the contracting community that there is no punishment and no penalty for abusing the program."

Between August and October of this year, the jobless rate among veterans who left active duty since 2001 climbed from 9.8 percent to 12.1 percent. President Barack Obama's administration has proposed hiring tax credits, private sector commitments, and reforms to help ease the problem.