Aubrey McClendon

[Jersey Boss]

Wow is all to be said.
Aubrey McClendon indicted | News OK
Aubrey McClendon has been charged by a federal grand jury with conspiring to rig bids for the purchase of oil and natural gas leases in northwest Oklahoma, the Department of Justice announced Tuesday.

The indictment in Oklahoma City federal court alleges that McClendon orchestrated a conspiracy between two large oil and gas companies to not bid against each other for the purchase of certain oil and natural gas leases in northwest Oklahoma.

[Pete]

I wonder the possible penalties if convicted?

Could jail time be involved?

[gopokes88]

Half of me thinks he'll get off with a fine or something the other half thinks they wouldn't charge him without a rock solid case

[Pete]

If they have a rock solid case, I'm sure there will be some sort of plea agreement...

Just wonder if jail time is a possibility in the worse case scenario.

[zookeeper]

If they have a rock solid case, I'm sure there will be some sort of plea agreement...

Just wonder if jail time is a possibility in the worse case scenario.

Absolutely it would be. If the federal prosecutors want to make a point with McClendon and his shenanigans then they will not be offering plea deals that wouldn't include prison time. Madoff, Martha Stewart, and other white collar criminals didn't get a pass, though admittedly many do. I think when all is said and done, the DOJ will show him and his legal team a long list of things they could nail him on, only sought the most serious count and will follow through. I noticed the True Bill was sought by the Antitrust division of the Department of Justice. They don't mess around. Conspiracy to rig the system while running a public corporation is a serious offense. A lot of people swore this day would come. Here we are.

[liirogue]

Any word on who the other company/conspirator is? According to the indictment, it's another OKC-based company.

[Timshel]

If they have a rock solid case, I'm sure there will be some sort of plea agreement...

Just wonder if jail time is a possibility in the worse case scenario.

I haven't read the indictment yet to know the specific charges, but as the DOJ's press release says, each violation of the Sherman Act carries a maximum penalty of 10 years in jail and $1 million fine. I would be surprised if it came to that, but I suppose your worst case scenario is 10 years times each count for which he is convicted.

My next two questions which may have more implications on the city/state are: 1) who is the other company involved in the conspiracy [Edit: liirogue beat me to this question.]; and 2) what will be the results of the following sentence from the DOJ's press release? "This is the first case resulting from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the oil and natural gas industry"

[zookeeper]

He is being charged with some very serious violations of the Sherman Act.

"Beginning at least as early as December 2007 and continuing until at least as late as March 2012, the exact dates being unknown to the Grand Jury, in the Western District of Oklahoma, the defendant, AUBREY K. McCLENDON, and his co-conspirators knowingly interred into and was in unreasonable restraint of interstate commerce in violation of Section 1 of the Sherman Act (15 U.S.C. § 1)."

From the DOJ:

"Violation of the Sherman Act is a felony punishable by a fine of up to $10 million for corporations, and a fine of up to $350,000 or 3 years imprisonment (or both) for individuals, if the offense was committed before June 22, 2004. If the offense was committed on or after June 22, 2004, the maximum Sherman Act fine is $100 million for corporations and $1 million for individuals, and the maximum Sherman Act jail sentence is 10 years. Under some circumstances, the maximum potential fine may be increased above the Sherman Act maximums to twice the gain or loss involved. In addition, collusion among competitors may constitute violations of the mail or wire fraud statute, the false statements statute, or other federal felony statutes, all of which the Antitrust Division prosecutes."


"In addition to receiving a criminal sentence, a corporation or individual convicted of a Sherman Act violation may be ordered to make restitution to the victims for all overcharges. Victims of bid-rigging and price-fixing conspiracies also may seek civil recovery of up to three times the amount of damages suffered."
https://www.justice.gov/atr/price-fi...cation-schemes

[Pete]

Thanks to all for the info.

Holy cow, this is serious business.

I'm sure they wouldn't bring charges if they didn't think they could prove them.

[zookeeper]

I haven't read the indictment yet to know the specific charges, but as the DOJ's press release says, each violation of the Sherman Act carries a maximum penalty of 10 years in jail and $1 million fine. I would be surprised if it came to that, but I suppose your worst case scenario is 10 years times each count for which he is convicted.

My next two questions which may have more implications on the city/state are: 1) who is the other company involved in the conspiracy [Edit: liirogue beat me to this question.]; and 2) what will be the results of the following sentence from the DOJ's press release? "This is the first case resulting from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the oil and natural gas industry"

Obviously, the Grand Jury will be handing down further indictments. Neither Company A or Company B are named as defendants. In a Chesapeake statement, they say this has been going on for some time and they have been cooperating with the federal investigation in return for leniency.

“Chesapeake has been actively cooperating for some time with a criminal antitrust investigation by the Department of Justice regarding past land leasing practices and has received conditional leniency under the Antitrust Division’s Leniency Program...Chesapeake does not expect to face criminal prosecution or fines relating to this matter. Chesapeake has taken significant steps to address legacy issues and enhance legal and regulatory compliance throughout the organization." - Chesapeake Statement

Another key: The Justice Department’s investigation is ongoing.

Bloomberg has a good summary of what we know - so far.
Ex-Chesapeake CEO McClendon Indicted Over Lease Bid Rigging - Bloomberg Business

[Pete]

^

Yes, that's the rub, isn't it?

Aubrey is no longer at CHK and thus can't control what information was given to the investigators. The current CHK management -- who happen to be suing him for other alleged improprieties -- have every motivation to share everything in exchange for pinning any wrong-doing on McClendon and keeping themselves out of hot water.

Looks like Chesapeake is not being charged at all.

[Timshel]

Another key: The Justice Department’s investigation is ongoing.

My point with quoting the DOJ release is that it can be interpreted to state they are investigating other instances of lease bid rigging not related to this indictment and these parties. If true, which I'm not saying is the case or even likely, it could be an entirely different fish to fry.

[zookeeper]

Best original reporting on this story is right here:
Former Chesapeake CEO McClendon charged with bid-rigging of land leases | Reuters

"The Justice Department indictment paves the way for what may be one of the highest-profile criminal antitrust cases against a well-known U.S. CEO in decades, and could thrust McClendon, a controversial figure whose aggressive leasing tactics are legendary in the energy industry, into the highest-stakes legal battle of a decades-long career."

"Chesapeake, SandRidge, and McClendon had previously disclosed in securities filings that they were being investigated by the Justice Department's Antitrust Division."

[Pete]

I wonder if Company B was SandRidge while under Tom Ward's watch?

Chesapeake, SandRidge, and McClendon had previously disclosed in securities filings that they were being investigated by the Justice Department's Antitrust Division.

[zookeeper]

I wonder if Company B was SandRidge while under Tom Ward's watch?

I would think the next True Bill will be for Tom Ward. If only because McClendon can't engage in a conspiracy with himself and we know there is an Oklahoma City-based 'Company B'. Of course, it could always be others at Sandridge, but their relationship begs the speculation.

[Pete]

From that Reuters article:

The seven-page indictment alleges that McClendon set up a conspiracy of two energy companies which agreed not to bid against each other in purchasing oil and natural gas leases in northwest Oklahoma from 2007 to 2012. The indictment did not name either company.

Ward left Chesapeake in 2006 and founded competitor SandRidge Energy Inc (SDOC.PK) the same year.

Chesapeake, SandRidge, and McClendon had previously disclosed in securities filings that they were being investigated by the Justice Department's Antitrust Division.

Tom Ward and McClendon were both deposed from their respective companies in 2013.

[zookeeper]

This will get huge play in the sports world, too.
Oklahoma City Thunder part owner Aubrey McClendon indicted on bid-rigging charges

[zookeeper]

Tom Ward and McClendon were both deposed from their respective companies in 2013.

You have to wonder if Sandridge is also availing themselves of the Antitrust Division’s Leniency Program. If so, with Ward being gone, they are both on the outside looking in at this point. Can you imagine McClendon knowing there's nothing he can do? At least until this all shakes out and he knows what all he will need to defend, something is actually out of his control.

[gopokes88]

If I had to bet I would bet that CHK emerges relatively unscathed.

On Aubrey, once again I'm conflicted I think he's smart enough to push that line without crossing it but I also know the DOJ's conviction rate is something ridiculous like in the 90+% range

[Pete]

If I had to bet I would bet that CHK emerges relatively unscathed.

The press release says that CHK will not be charged.

[Jeepnokc]

Reading article in the Oklahoman, the time line printed indicates the other company involved may be Encana Corp and the leases were in Michigan.

[Pete]

Reading article in the Oklahoman, the time line printed indicates the other company involved may be Encana Corp and the leases were in Michigan.

That was for another anti-trust case already settled in the state of Michigan.

This indictment is for leases in NW Oklahoma and specifically says Company B is based in OKC.

I'm 99.9% sure it's SandRidge under Tom Ward.

[Jeepnokc]

That was for another anti-trust case already settled in the state of Michigan.

This indictment is for leases in NW Oklahoma and specifically says Company B is based in OKC.

I'm 99.9% sure it's SandRidge under Tom Ward.

Thats what I get for reading the paper before my 2nd cup of coffee.

[Pete]

Follow the Reuters coverage.

They did all the original reporting on Chesapeake that led to McClendon getting ousted and that started this whole DOJ investigation in the first place.

They had reporters based here for quite some time investigating all this as recent as late last year.

[jn1780]

On Aubrey, once again I'm conflicted I think he's smart enough to push that line without crossing it but I also know the DOJ's conviction rate is something ridiculous like in the 90+% range

Aubrey isn't a banker so he's screwed.