He lied originally, kinda.

He made a cypher with a school friend, which cypher was handed by a stranger to the FBI and investigated. That one possible outcome of the investigation might be 'the subject is a Japanese spy' doesn't mean _he_ was suspected of that; not by the FBI at least.

If he said, "I made a cypher in school", then likely the form would have been considered fine? Presumably his record clearly showed the FBI incident, so I'm surprised that lying in the second form didn't cause concern sufficient to question him. But there you go; I've never had any associations with TLAs, what would I know.