This post was updated at 09:25am EST on March 2, 2016 with more context on the case and at 9:50pm EST on March 1, 2016 to include comment from a spokesperson from Chesapeake Energy.
Aubrey McClendon, who was CEO of Chesapeake Energy (CHK) until April 2013, has been indicted for "masterminding conspiracy," according to a statement released by the Justice Department on Tuesday evening.
"While serving as CEO of a major oil and gas company, the defendant formed and led a conspiracy to suppress prices paid to leaseholders in northwest Oklahoma," Assistant Attorney General Bill Baer of the Justice Department's Antitrust Division said in the statement. "His actions put company profits ahead of the interests of leaseholders entitled to competitive bids for oil and gas rights on their land."
The indictment alleges McClendon orchestrated a bid rigging conspiracy between two large oil and gas companies, which ran from December 2007 to March 2012. The alleged conspirators agreed not to bid against each other for the purchase of oil and gas leases in northwest Oklahoma. The bidders would decide ahead of time who would win the leases and would give interest in the leases to the other company, the statement read.
The case brought against McClendon is the first coming from an ongoing federal antitrust investigation into price fixing, bid rigging and other "anticompetitive conduct" in the oil and gas industry, the statement said. Each violation of the Sherman Antitrust Act has a maximum penalty of 10 years in prison and a $1 million fine for individuals.
In 2012, Reuters investigated similar charges involving Chesapeake Energy and Canadian-based Encana's (ECA) efforts to suppress land-prices in Michigan in 2010. Both Chesapeake Energy and Encana settled with the state: Encana paid $5 million in 2014 and Chesapeake Energy paid $25 million in 2015. The Michigan investigation was closed, but subsequently evidence was found of alleged bid-rigging in Oklahoma, Reuters reported.
"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," Gordon Pennoyer, a spokesperson for Chesapeake Energy said in an emailed statement.
"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."