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Ultimately, it depends on the magnitude and type of the lie. If you make up some kind of activity and something outside of your control (teacher recommendation, guidance counselor recommendation, interview slip-up) contradicts what you have written on your application, it's a big red flag.
Often, people CAN get away with embellishing their activities in a big way or making other things up, but it also should be said that if a school discovers after accepting you that you falsified application information, it is totally within its right to remove you from the school or even to annul your diploma if they find out (for some reason) after you graduate.
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