Chesapeake Pleads Not Guilty in Michigan Racketeering Lease Case

Chesapeake Energy Corp. (CHK), already facing antitrust claims in Michigan over bids on gas exploration rights, pleaded not guilty to charges that it lied to landowners about leases it took out on their property.

Representatives of the Oklahoma City-based company entered the plea to racketeering and fraud charges today in Michigan state court in Cheboygan.

Michigan Attorney General Bill Schuette accused Chesapeake, the second-biggest U.S. natural gas producer, of tying up landowners in 2010 by telling them existing mortgages were no barrier to leasing their properties, then citing those same mortgages as justification for canceling almost all the leases after competition for them ceased.

The allegations followed earlier accusations that the company colluded with a unit of Calgary-based Encana Corp. to divide the Michigan counties in which they’d bid for exploration rights in 2010, driving down prices.

Encana last month agreed to pay $5 million to settle civil litigation over its leasing activities and to not contest a charge it tried to collude with Chesapeake.

Chesapeake has denied all the charges.

“We believe this action has no merit and we will vigorously contest these baseless allegations,” Gordon Pennoyer, a Chesapeake spokesman, said today in a statement.

To contact the reporter on this story: Andrew Harris in federal court in Chicago at aharris16@bloomberg.net

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net

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