Bid-Rigging Conspiracy Involved Many Employees

The indictment filed against Aubrey McClendon in Oklahoma City’s western district of the U.S. District Court indicates that many more than just McClendon were involved in the alleged scheme to rig bids on oil and gas leases in northwest Oklahoma.

As laid out in the several-page filing, U.S. prosecutors with the Department of Justice stated, “Various corporations and individuals, not made defendants in this Indictment, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof.”

But more specifically, without naming names, the U.S. Attorney’s filing said, “the allegation means that the corporaton engaged in the act, deed, or transaction by or through its officers, directors, agents, employees, or other representatives while they were actively engaged in the management,direction, control or transaction of its business or affairs.”

How many others were involved? The indictment doesn’t offer any more clues. But the charges, filed only the same day that the 56-year old McClendon died in a traffic crash in Oklahoma City alleged it was a conspiracy to not only rig bids on oil and gas leases but also to keep it secret.

The charges indicate that from McClendon and others on down, the conspiracy was known in the companies involved and employees were under orders to keep the scheme from being made public. Just how far down the alleged conspiracy went wasn’t revealed in the charges.

“Employing measures to keep their conduct secret, including, but not limited to, agreeing not to reveal their anticompetitive agreement to the owners of the leasehold interests and producing properties at issue in this Indictment, and instructing their subordinates to do the same,” stated the charge in explaining the “Manner and Means of the Conspiracy.”

Based on apparent testimony from un-indicted individuals, the grand jury and prosecutors knew the exact start of the date of the bid-rigging conspiracy.

“The charged combination and conspiracy began on or about December 27, 2007 when the defendant, Aubrey K. McClendon, contacted Co-conspirator I and proposed eliminating the head-to-head competition between Company A and Company B for the purchase of certain leaseholds and producing properties in northwest Oklahoma by agreeing not to submit bids for these leaseholds and producing properties in order to keep prices down,” stated the charge. It also said that McClendon and the co-conspirator, thought to be Tom Ward of SandRidge Energy but not named in the indictment, agreed to refrain from submitting bids for the leaseholds and producing properties in order to keep prices down “and in exchange for Company B receiving a share of the leaseholds and producing properties purchased by Company B at Company A’s cost.”

Part of the scheme, according to the charges, included “acting to withdraw previously submitted offers or bids, to owners of certain leasehold interests and producing properties.” The charges indicate that the scheme lasted for nearly 5 years. It apparently ended when McClendon was forced out of leadership at Chesapeake Energy.

Before his death, McClendon professed he was innocent and vowed to fight the charges.

But the indictment and the charges suggest prosecutors might have had a solid case against the oilman. Had he been convicted, McClendon could have ended up in prison because the one count of conspiracy carried up to 10 years in prison, twice the gross pecuniary gain the conspirators derived from the crime or twice the gross peuniary loss caused to the victims. Under the penalty, the court could also have ordered McClendon to pay restitution to the victims. The penalties could have been into the millions and millions of dollars.