Looking at the visual characteristics of the Red Star, it seems to be a variant with a serial number in the 3.7 or even 3.8 million range. Plus, from a chronological point of view too a serial number in the 3.5 million range would be highly unusual, as RedMaestro stated, since all 3.5 mil Red Stars were awarded in the 1950s and 1960s, the latest having been awarded in 1967 according to my files.
Having said that, I think everything looks as it should. I have a virtually complete database of all Armed Forces decrees and I'm not aware of a March 28, 1978 decree, so that might suggest he served in a state security capacity.