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Chesapeake Facing 12 More Charges in Alleged Michigan Lease Scheme

Michigan Attorney General Bill Schuette on Wednesday added 12 more charges to a racketeering and fraud complaint filed earlier this month against Chesapeake Energy Corp.

The amended complaint includes 12 "additional victims" of Chesapeake, resulting in a 20-count indictment on charges of false presences and one count of conducting a criminal enterprise, said spokeswoman Joy Yearout.

The complaint is in connection with leasing activity through leasing agents OIL Niagaran and shell corporation Northern Michigan Exploration in the state four years ago (see Daily GPIJune 5). Schuette alleges that the Oklahoma City-based operator directed its agents to recruit "multiple landowners across Northern Michigan to lease their land" in the summer of 2010. Allegedly, landowners often notified the agents of existing mortgages on the land to be leased, and the agents allegedly indicated the mortgages would not be an obstacle.

Nearly all of lease agreements allegedly were canceled, with the agents claiming that mortgages were the purported basis. Chesapeake is alleged to have signed leases with as many as 800 landowners, honoring fewer than 30 of the agreements (People v. Chesapeake Energy Corp., No. 2014-0076935-B).

Representatives of Chesapeake appeared for arraignment in Cheboygan County District Court before Judge Maria Barton, Yearout said. A $10,000 personal recognizance bond was set for Chesapeake, with a preliminary exam date set to begin on Aug. 18 in Cheboygan.

A preliminary exam for the state's antitrust case against Chesapeake was completed in May, and the parties are awaiting a final ruling by Barton on whether that case may proceed to trial.

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