Everyone has the urge to inflate and embellish on apps. Do people put outright lies on their app? Yes probably happens. Do the AOs have time to fact check each statement? No.
But I’ve heard of cases where the AO will call the guidance/college counselor at the HS to verify things. An outright lie in this case would result in a rejection.
In other cases, I’ve heard of students getting caught after graduation. In this case their diplomas are rescinded.