Robbery By False Pretences
If a bhikkhu lies about his spiritual attainments, it may be ground for the offence of Defeat. The originating circumstances for this Rule occurred during a famine when food was scarce and many bhikkhus found alms food difficult to obtain. A group of these monks devised a scheme where they told lay people of each others attainments of superior human states, often deliberately lying to impress them. The faithful lay people gave alms to such special bhikkhus thinking that it would bring greater merit so they and their families went without food in order to feed those monks. Later, when the Buddha knew of this he rebuked them and described them as the worst of the Five Great Thieves — immoral monks who obtain their alms food as a robber does. He set down:
"A bhikkhu who boasts of [superior human states."] which he has not in fact attained, commits [an offence of Defeat.]"
(Paar. 4; Nv p.5)
"Deliberately lying to another person that one has attained a superior human state is [an offence of Defeat.]"
(Summary Paar. 4; BMC p.86)
The Commentary classes superior human states (uttarimanussadhamma) as either: meditative absorption (jhaana), and certain psychic powers (abhinnaa)  or the path and fruit leading up to Nibbaana.
A deliberate lie is normally an offence of Confession (Paac. 1) but this deliberate false avowal of meditative attainment is classed as the most serious Defeater Offence. This shows how much more damaging it was considered to be. When a guru like bhikkhu falsely puts himself forward as enlightened, his lies can be destructive not only to himself and his followers but to the whole of Buddhism.
"It may be hard to imagine in the present time why falsely claiming superior human conditions should be judged so severely. However, by reflecting that bhikkhus are totally dependent upon the generosity and goodwill of believing lay people, one may be able to appreciate the situation better. By falsely claiming high spiritual attainments a bhikkhu is equivalent to a swindler or defrauder, but in the worst way, since this involves spiritual fraud — dealing with the most precious and profound aspects of human existence."
A bhikkhu commits no offence when he has no intention to make superior claims, even if it is wrongly understood or misconstrued that way. If a bhikkhu is insane, psychotically believing his own delusions of grandeur and making extravagant claims of his own enlightenment, he receives exemption from any offence.
The eighth Confession rule is closely connected with this one of Defeat but there the announcement is true. Even so, indulging in such disclosures to lay people requires confession especially when, as in the origin story, a bhikkhu does so just to obtain more alms. The Lord Buddha criticized the showing off of even genuine supernormal attainments:
"To tell an unordained person of ones actual superior human attainments is [an offence of Confession.]"
(Rule Summary, Paac. 8; BMC p.288)
Divination, casting spells, mediumship, giving protective charms, exorcism, fortune telling, astrology, ghost lore, etc., are classed as low animal like knowledge (see Wrong Ways of Behavior) and do not come under this rule.2.
According to the Commentary, an insane monk is one who "goes about in an unseemly way, with deranged perceptions, having cast away all sense of conscience and shame, not knowing whether he has transgressed major or minor training rules" (See BMC p.49)
There are monks who are not insane but who believe in their own delusions of grandeur. They are not exempt from offences.