A US Navy admiral has been accused of making counterfeit $500 poker chips after developing a serious gambling habit.

Vice-Admiral Timothy M. Giardina, who was fired last year as second in command of US nuclear forces, spent 1,000 hours at the poker tables during the 18 months leading up to his downfall when he was caught with three fake chips in an Iowa casino.

Mr Giardina denies playing any role in the making of the chips, despite DNA evidence linking him to the process of turning a genuine $1 chip into a fake $500 one.

Gambler: Navy Vice Admujral Tim Giardina was known as 'Navy Tim' at the local casino, and spent more than 1,000 hours - or 15 hours per week - there in the 18 months leading up to the fake chips incident

Mr Giardina has previously admitted that he played the fake chips at a poker table in the Horseshoe Casino in Council Bluffs, Iowa, in June 2013.

He was caught with three fake chips, but claimed he had found them in the bathroom of the casino, and decided to play with them.

As part of a Navy criminal investigation into the counterfeit chips, Mr Giardina was fired as No. 2 commander of U.S. nuclear, and downgraded from a three-star admiral to a two-star admiral.

The three chips in question were altered with paint and stickers to make genuine $1 casino chips look like $500 chips.

An Army lab found a 'major contributor' of Mr Giardina's DNA on the underside of the adhesive sticker that had been affixed by the counterfeiter.

Mr Giardina claims he found the fake chips in the mensroom at the Horseshoe Casino in Council Bluffs, Iowa

In a statement released in April this year, Mr Giardina said he deeply regretted having not immediately surrendered to security officers the four chips which he said he found in a toilet stall at the Horseshoe.

He said it was an 'error of judgment' that he put three of the chips in play at a poker table, and said he was sorry that he subsequently lied in saying he had purchased them from a man in the bathroom.

'I should have either told the truth or remained silent instead of lying about the events when questioned' by an Iowa state investigator on June 18, 2013, he wrote. That was two days after he played the fake chips and casino officials determined they were counterfeits.

He added, 'This lapse in judgment does not make me a thief and a criminal.'

Mr Giardina also wrote that he does not have a gambling problem.

However, a new document released under the freedom of information act paints a different picture.

According to these documents, Mr Giardina was known as 'Navy Tim' at the Horseshoe, and spent more than 1,000 hours - or 15 hours per week - playing poker in the casino in the 18 months leading up to the fake chips incident, the Telegraph reports.

At the time of the casino incident, Mr Giardina was deputy commander of U.S. Strategic Command, which has responsibility for the nation's entire nuclear weapons force and is based near Omaha, Nebraska.

Mr Giardina denies playing any role in the making of the chips, despite DNA evidence linking him to the process of turning a genuine $1 chip into a fake $500 one

Mr Giardina wrote that in discussing his case with the commander of Strategic Command at the time, Air Force Gen. Robert Kehler, as well as Navy officers and law enforcement officials in Iowa, 'the common opinion is that I have a 'gambling problem' and that this gambling problem was my motive' in the counterfeiting. He added that Kehler, who has since retired from the military, felt Mr Giardina had an 'obvious gambling problem.'

Mr Giardina wrote that he does not have a gambling problem and does not consider poker a form of gambling.

'Regardless of anyone's opinion on the matter, disapproval of the legal manner in which I spent portions of my off-duty time is not adequate grounds to allege criminal misconduct,' Giardina wrote.

Mr Giardina had been at risk of being prosecuted by the Navy for counterfeiting the chips, but Gortney chose instead to give him what the military calls non-judicial punishment — in this case a letter of reprimand and the loss of $4,000 in salary. Navy officials have said no court martial was sought because the available DNA evidence against Giardina might not hold up in court.

In his April 2014 statement to Gortney, Mr Giardina wrote that he suspects the chip counterfeiter left them in the bathroom stall 'for a reason,' possibly to observe casino security's reaction when the finder either turned them in or put them in play.

'I do not believe I was singled out to find them, but believe that I was a patsy for someone who wanted the chips to be found,' he wrote.

Mr Giardina's gambling habits 'may be a symptom of wider malaise at the heat of America's nuclear deterrent,' the Telegraph writes.

Earlier this month, US Defense Secretary Chuck Hagel pledged an additional $10 billion to correct deep problems of neglect and mismanagement within the nation's nuclear forces.

Hagel ordered top-to-bottom changes in the nuclear arsenal's management, which he said had been allowed over the years to backslide, afflicted by broken and missing equipment, poor leadership and inadequate training and staffing.