The Collaborative International Dictionary of English v.0.48:

Fabulize \Fab"u*lize\, v. i. [imp. & p. p. Fabulized; p. pr. &
   vb. n. Fabulizing.] [Cf. F. fabuliser. See Fable.]
   To invent, compose, or relate fables or fictions. --G. S.
   Faber.
   [1913 Webster]