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Former Chesapeake CEO Aubrey McClendon charged with bid-rigging of land leases

Aubrey McClendon, former chief executive officer (CEO) of Chesapeake Energy Corp, was charged on Tuesday with conspiring to rig bids to buy oil and natural gas leases in Oklahoma, according to the Justice Department.

The indictment alleged that McClendon masterminded a campaign to keep bid prices down from 2007 to 2012, while he was the CEO, amid a land-leasing boom across the Michigan. The Justice Department didn't name anyone else it believed participated in the alleged conspiracy.

The Michigan attorney general brought criminal charges against Chesapeake, which the company settled in 2015 by agreeing to pay $25 million into a compensation fund for land owners.

In 1989, McClendon co-founded Chesapeake with fellow Oklahoma oilman Tom Ward. In 2013, he resigned from Chesapeake amid a liquidity crunch and corporate governance concerns. In 2006, Ward left Chesapeake and founded competitor SandRidge Energy Inc the same year.

McClendon, who is now with American Energy Partners (AEP), was charged with one count of conspiracy to rig bids, a violation of the Sherman Antitrust Act.

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

Recently, both Chesapeake and SandRidge have engaged restructuring experts as they try hard to pay off billions in debt and avoid potential bankruptcy. Chesapeake's stock price has plummeted more than 80 percent in the last year, while SandRidge was delisted from the New York Stock Exchange in January, and closed Tuesday at 4 cents per share.