Using multiple shell companies to hide its identity, the nation’s second largest gas driller conned hundreds of Michigan farmers into signing gas and oil leases and then avoided paying them any royalties.

 

Chesapeake Energy Corp. pulled off its scheme by creating two front companies, the last of which, Northern Michigan Exploration LLC, was used to hire local brokers to find farmers willing to allow drilling on their properties. The plan was hatched with the involvement of Chesapeake’s co-founder, CEO Aubrey McClendon, whose name also appears on the shell company.

 

According to an investigation by Reuters, “owners missed opportunities to lease their land to other oil firms. At least 115 have sued, alleging that Chesapeake breached their contracts and defrauded them. On average, they each had been expecting $95,000 in bonuses,”

 

After the checks they were promised failed to arrive, farmers went after Northern Michigan Exploration, only to find there was no money behind it. Chesapeake, on the other hand, has assets worth $37 billion.

 

“It was all a fake, all a scam,” landowner Eric Boyer-Lashuay told Reuters.

-Noel Brinkerhoff