Chesapeake Energy Shares Up Despite Charges From Michigan Attorney General
In a press release issued Thursday, Michigan Attorney General Bill Schuette announced the second round of criminal charges filed against Chesapeake Energy (NYSE: CHK), including fraud and racketeering.
Despite these newly-filed charges, shares of Chesapeake Energy are trading up almost two percent following news that Rose Rock Midstream (NYSE: RRMS) will acquire 124 trucks, 122 trailers and 200 employees from Chesapeake.
"I will defend and protect the taxpayers of Michigan in the face of fraudulent business practices," said Schuette. "Scamming hardworking Michigan citizens is not how we do business in this state.”
Gordon Pennoyer, Chesapeake's Director of Strategic Communications, responded, "We believe this action has no merit and we will vigorously contest these baseless allegations."
The complaint filed by Schuette alleges that Chesapeake obtained uncompensated land options by misdirecting northern Michigan landowners into lease agreements, despite existing mortgages on the land to be leased. The company's agents reportedly said the mortgages "would not be an obstacle." When Chesapeake later cancelled the leases, however, it cited the mortgages as the reason.
The charges filed against the company included in the press release are:
- One count of Conducting Criminal Enterprises, a felony punishable by a fine up to $100,000
- Eight counts of False Pretenses, $1,000 to $20,000, a felony punishable by a fine of $10,000 per count, or three times the value of the money or property involved, whichever is greater.
The arraignment of Chesapeake is scheduled for June 25, 2014, at 10:30 a.m. before Cheboygan County's 89th District Court.
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