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Oil Company Faces Criminal Charges Over Northern Michigan Leases

State Attorney General Bill Schuette is ready to fend off court challenges to "right to work."
State Attorney General Bill Schuette is ready to fend off court challenges to "right to work."

Michigan Attorney General Bill Schuette has accused an energy company of scamming some northern Michigan landowners out of oil and gas lease payments. The attorney general’s office filed criminal charges today in Cheboygan.

Similar to earlier civil claims, today’s charges say Chesapeake Energy purchased options from eight landowners to drill for oil and gas, promising that mortgages on the property would not be a problem. The options shut out other companies from bidding on the leases. The state says Chesapeake later used the mortgages as a pretext for cancelling the leases without paying.

Schuette says his office is still looking for other scam victims. In a statement, Chesapeake says the charges are “without merit,” and the company will fight them.

Chesapeake is the second-largest natural gas producer in the country. The fines in this case, if the company is found guilty, would probably not put a dent in Chesapeake’s $17 billion dollars in annual earnings.

Chesapeake also faces a civil lawsuit in Michigan alleging the company was part of a bid-rigging scheme.

Rick Pluta is Senior Capitol Correspondent for the Michigan Public Radio Network. He has been covering Michigan’s Capitol, government, and politics since 1987. His journalism background includes stints with UPI, The Elizabeth (NJ) Daily Journal, The (Pontiac, MI) Oakland Press, and WJR. He is also a lifelong public radio listener.