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Shell corporations used by Chesapeake Energy billionaire CEO to bilk elderly farmers in Michigan

January 6, 2012

Persistent investigative reporters at Reuters traced a chain of shell (fake) companies in Michigan — companies which are now rejecting  97% of the gas drilling leases they signed with hundreds of farmers, many elderly — back to Chesapeake Energy corporation and its CEO, billionaire Aubrey McClendon.

The shell companies, designed specifically to hide the identity of Chesapeake Energy, are now going back on promises they made, sometimes using “bogus” reasons. For example, a 93-year-old widow who signed a lease with a shell company a month after her husband died is now being told that because her husband did not sign the lease, the lease is void.

Chesapeake Energy drills, and pollutes, heavily in Pennsylvania but the mega-corporation is based in Oklahoma. Reuters reports, “Its holdings include about 15 million acres in at least 23 states – a drilling area nearly the size of Ireland. Since 2008, Chesapeake has raised $13 billion by selling off a portion of those leases to energy firms as far away as China and Australia.”

Here’s a two-minute overview of a few of the horrors Chesapeake Energy is responsible for in PA, LA and TX, and MI:

  • Chesapeake is responsible for the dramatic Bradford County blowout which contaminated local residents’ water in 2011; the contamination is ongoing
  • McClendon has bankrolled Tom Corbett, Pennsylvania’s current governor, since 2004 when he was an obscure attorney running for District Attorney (prior to that, Corbett attracted trash to PA when he worked for four years for Waste Management, a stint he later obliterated on his resume in order to run for governor);
  • Chesapeake is the responsible for a great deal of methane migration in Bradford County, PA, including the intensive methane migration impacting residents of Paradise Road;
  • PA DEP fined Chesapeake Energy $1.1 million for contaminating the private water supplies of 16 families and for causing a fire; environmentalists called the fine, compared to the scale of Chesapeake’s earnings, a “slap on the wrist”
  • Chesapeake is also the company whose fracking fluid spill killed 17 cows in Louisiana in 2009; the cows died in agony with major organ failure after drinking water mixed with .05% fracking fluid
  • In Texas, as Protecting Our Waters reported this week, the Scoma family in Johnson County is suing Chesapeake Energy, claiming the company contaminated their drinking water with benzene and petroleum by-products after hydraulic fracturing of natural gas wells near the Scoma home. The family reports that its drinking water sometimes runs an orange-yellow color, tastes bad and gives off a foul odor.
  • In Michigan, setting up fake companies and bilking elderly farmers isn’t enough for McClendon. He also seeks to wreck what he himself called “the most beautiful land I’ve ever seen,” by trying to build condos, a hotel, marina and golf course on ecologically sensitive dunes.  A small town risked bankrupty to fight back, the Wall Street Journal reports here.

Chesapeake Energy CEO Aubrey McClendon, who shows off by drinking “easily ten thousand dollars worth” of alcohol at a single dinner — wining and dining a Forbes writer who claimed not to be influenced by the extraordinarily expensive booze — is the ultimate 1%-er. He scoops up criminal levels of wealth (Forbes called him a “hero” for this feat) while destroying the quality of life, and life itself, for vulnerable people in multiple states.

Carl Stiles, formerly of Sugar Run, Bradford County, PA, says a doctor told him to expect to get leukemia as a result of contamination for which he holds Chesapeake responsible. We may never know just how many people are suing Chesapeake Energy right now; Carl and his wife Judy, who have both been sick for over a year and left their Sugar Run home on doctors’ orders, are among them. What we do know is that Chesapeake Energy has lots of lawyers leaping to defend the giant corporation against environmental refugees, 93 year old widows, and the like.

Please read the full Reuters story to understand yet another angle on the extraordinary misbehavior of this rogue corporation, and spread the word.

  1. Nick permalink
    January 6, 2012 7:52 am

    I wonder if this would have anything to do with the need to frac their wells to obtain economic production? IF both parties sighed their lease AND all terms were met, I would be surprised to hear that Chesapeake defaulted on their agreement.

    Operating companies, many times, send local lease brokers out to obtain leases so as to not tip their hand to other companies, in an attempt to get in & out before the lease price “boom” hits the area. In other areas of the country, once it becomes known that Chesapeake wants your lease, prices go up.

  2. rik sherry permalink
    January 15, 2012 10:40 am

    He should be in prison!

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