Oregon Governor John Kitzhaber promised that its Cover Oregon web portal for the state ObamaCare exchange would lead the nation. The portal managed to lead the nation in incompetence and failure — but did it also lead it in fraud? One lawmaker has blown the whistle on deceptive reports sent to the federal government that allowed Oregon to get tens of millions of dollars from Washington for the project, allegedly including dummy web pages intended to fool HHS into believing that Cover Oregon development was on schedule. KATU continued its investigative reporting into Cover Oregon with this stunning update:

Former Republican state Rep. Patrick Sheehan told the KATU Investigators he has gone to the FBI with allegations that Cover Oregon project managers initiated the design of dummy web pages to convince the federal government the project was further along than it actually was.

If Sheehan’s allegations are true, those managers could face time in jail for fraud.

“One of the allegations that was made was so alarming that it went way beyond a legislative oversight committee and so I did reach out and contact the FBI,” Sheehan said.

“The issue had to do with federal funding and proving some amount of compliance with the federal regulation in order to get funding.”

The problem was that the project’s CIO, Carolyn Lawson, didn’t know how to build a web portal for a health-insurance exchange, and neither did the people hired for the project. She did, however, know how to make it look like she knew how to build one, at least well enough to fool HHS:

What that meant for the Cover Oregon website was that it was able to paint a picture of a flashy website – imagine a concept car that looks flashy in the showroom but doesn’t actually run.

But documents uncovered by the KATU Investigators show Lawson hadn’t actually figured out how to build the site, even as she was promising the federal government – and her bosses – that Cover Oregon’s website was going to work.

So what, exactly, were the federal and state reviewers being shown?

In a Sept. 27, 2012 email to Bruce Goldberg – Lawson’s boss at the Oregon Health Authority, who is now in charge of Cover Oregon – she sent a link to something called “The Solution Factory,” a site hosted by software contractor Oracle.

Lawson wrote in the email that the link went to a site hosting the same demonstrations the team provided to project stakeholders.

“It demonstrates what we have built to date,” she wrote. “By watching this every month, you can see our progress in real time.”

Let’s make sure to note that this doesn’t appear to be a very effective fraud, except when targeted at the truly ignorant. After all, an agency that’s certifying work for a state exchange should have the wherewithal to check the actual functionality. If a bunch of non-functioning web pages was enough to fool HHS into writing $59 million in checks, then the web pages weren’t the only dummies involved here.

State Rep. Patrick Sheehan called the FBI after discovering the potential fraud, which could result in a large amount of prison time at Club Fed if substantiated. The FBI won’t specifically state whether they’re investigating Cover Oregon officials for fraud, but Sheehan says they have discussed the case on several occasions since his first call. Oregon voters might wonder just what Kitzhaber knew on this issue, and when he knew it, too.