Former Chesapeake Energy CEO Aubrey McClendon has been indicted by a federal grand jury on charges of conspiring to rig bids for the purchase of oil and natural gas leases.
The indictment was filed on Tuesday in the U.S. District Court for the Western District of Oklahoma.
It alleges that McClendon “orchestrated” a conspiracy between “two large” oil and gas companies from December 2007 to March 2012 to collaborate on bids for oil and gas leases in northwest Oklahoma.
The conspirators allegedly decided who would place the winning bid ahead of time, with the winner then allocating an interest in the lease to the other company.
McClendon also allegedly instructed his subordinates to execute the conspiratorial agreement, including withdrawing bids on leases and agreeing on how the stakes in the leases would be divided between the two companies.
“His actions put company profits ahead of the interests of leaseholders entitled to competitive bids for oil and gas rights on their land. Executives who abuse their positions as leaders of major corporations to organize criminal activity must be held accountable for their actions,” Assistant Attorney General of the Justice Department’s Antitrust Division Bill Baer said.
McClendon left Oklahoma-based Chesapeake Energy in January 2013 and currently serves as the CEO of American Energy Partners.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.
McClendon has denied any wrongdoing.
“The charge that has been filed against me today is wrong and unprecedented. I have been singled out as the only person in the oil and gas industry in over 110 years since the Sherman Act became law to have been accused of this crime in relation to joint bidding on leasehold,” McClendon said in a statement.
McClendon’s lead lawyers, Abbe Lowell of Chadbourne & Parke and Emmet Flood of Williams & Connolly, said that McClendon has been “wrongfully singled out” and “wrongly charged.”
“The Justice Department has taken business practices well-known in the Oklahoma and American energy industries that were intended to, and did in fact, enhance competition and lower energy costs and twisted these business practices to allege an antitrust violation that did not occur,” McClendon’s lawyers said.
Chesapeake Energy told Reuters that the company has been cooperating for “some time with a criminal antitrust investigation” being conducted by the DOJ into past land leasing practices.
“Chesapeake does not expect to face criminal prosecution or fines relating to this matter,” a company spokesman told Reuters.