So far, the existing answers offer frame challenges, but your actual question has only been addressed in comments. So let's compile those comments into an answer (because comments are ephemeral).

What kind of bad stuff can happen when lying on an ESTA application?

• Your ESTA gets denied, you get denied boarding by CBP, you get a long talk with CBP on arrival, you have to wait for hours on arrival for them to check your documents. (@jcaron)
• As to being denied check-in with an approved ESTA, it's possible that the CBP system that evaluates the APIS record sent by the airline will notice your US citizenship and send a "do not board" response because of 8 USC 1185(b). I don't think they do this, but who knows if they'll start at some point. (@phoog)
• The worst case scenario seems to be a fine of up to $250,000 and/or imprisonment up to 5 years. This is an exceedingly unlikely punishment even in the exceedingly unlikely event of a conviction under 18 USC 1001, but it is theoretically possible, so qualifies as a worst-case scenario. (@phoog)
• The main problem with a conviction under 18 USC 1001 is not the penalty or imprisonment (which may be unlikely), but a felony conviction, which is an indefinite stain which can cause a whole lot of troubles to the person. Ask Michael Flynn. (@littleadv)