Just as a point of clarification, SDN does *not* run any type of background check on the mods. No one has ever required me to verify that I'm a med student, that I have a PhD, that I'm a student adcom, or even what my real name is. You are basically going on my word when I tell you that all of these things are true. Also, you can become a lifetime member of SDN
simply by donating money. It costs $250. What it comes down to is that all information you find on SDN should be read critically, no matter how long someone has been a member of this site or what their training status says. There are no private detectives working for SDN who have checked up on me....that I know of.
Getting back to the OP's question, falsifying your app in any way is a bad plan, and it's not even necessary. Adcoms don't expect applicants to be perfect. That being said, having a situation like this with a prior matriculation is definitely something you'd want to explain on your app. There's a big difference between applying to re-matriculate because you had a health problem versus applying to re-matriculate because you were convicted of being a serial killer!