Replies to This Discussion

Permalink Reply by Checkmateking on March 21, 2011 at 16:14

They are shady, but you will be bound to your lease.

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Permalink Reply by Henry on March 21, 2011 at 23:25

Judy,

Every month, when people send me their gas prices, I hear horror stories regarding people's dealings with CHK.  My data show that they pay lower prices for gas than the other operators.  I don't know if this is because they give their landowners a lower price (as a result of sales among their many affiliates and subsidiaries), or if they jack up the cost of the deductions, or both.  I cannot tell you if what they do is legal or not.  I can tell you that class action suits have been filed in the Fayetteveille Shale and the Barnett Shale over this exact issue.  It is only a matter of time until one or more is filed in the Haynesville Shale -- the lawyers are working on them, as I write this.

 

Aside from contacting your attorney, I suggest you contact your representatives.  The local parishes and the state have land leased to them, and they are also presumably getting these dog prices.  They should be encouraged to investigate.

 

 

 

 

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Permalink Reply by HBP on March 22, 2011 at 5:19

Besides the class action that directly targets CHK.  The Shell v. Ross case has already pierced the scheme somewhat on confusing royalty payments and may set a precedent. (Shell Oil Company SWEPI LP v. Ross, 2010 WL 670549 (Tex.App.-Houston [1st Dist.], decided February 25, 2010).  The facts (rough summary) had Shell basing their gas price off of averaged sales from a unit where other WI owners were selling their own gas (which dragged the price they pay off of down, but not the price they realize) and there was some 3rd party affiliate issues they got hung on as well.

 

While the facts may not match up exactly to some of the payment issues over here (but in some cases it might), I think the case shook some of the operators.  CHK stepped up and filed friend of the court briefs in the case arguing Shell's points against the landowner.  They don't normally spend that expense and go to bat for their competition unless they are worried about precedent.

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Permalink Reply by Henry on March 22, 2011 at 23:34

Here are the links to the two big class-action suits in the Barnett and Fayetteville Shales:

http://www.courthousenews.com/2010/03/15/EnergyCA.pdf

http://www.oilandgaslawyerblog.com/Coffey%20v%20Chesapeake.pdf

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Permalink Reply by P.G. on March 22, 2011 at 3:49

How could they get away with deducting expenses they didn't have to pay?

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Permalink Reply by The_Baron on March 22, 2011 at 4:13

I imagine that CHK will set up a shady but legal arangment between their subsidiaries.

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Permalink Reply by Judy McDaniel on March 22, 2011 at 5:04

P. G.  Yes, that is my point exactly... CHK isn't being charged any expense related to treating or transporting the gas.  The only mention of expense in my Lease Agreement states I have to "bear my proportion of any expenses for treating the oil to make it marketable as crude."  I do not see anything in the agreement that says I must bear my proportion of Aubrey's salary.

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Permalink Reply by TAURUS on March 22, 2011 at 9:44

Keep any written correspondence that is sent to you via the mail. In the event that fraudulent activity can be proven, the penalties for "mail fraud" have real teeth and have brought some pretty large entities to their knees. I had a go around with John Deere last year where I brought this into the scenario. They had sent me bills for parts and labor that had not been performed /installed. I had their list of part numbers and pictures of my machines "post-work". When I brought up mail fraud I can tell you they backed up quick! All of a sudden my bill was getting cut down to size pronto. This is some of what I sent them.

 

http://www.lectlaw.com/def2/m001.htm

MAIL FRAUD

18 U.S.C. 1341, makes it a Federal crime or offense for anyone to use the United States mails in carrying out a scheme to defraud.

A person can be found guilty of that offense only if all of the following facts are proved: First: That the person knowingly and willfully devised a scheme to defraud, or for obtaining money or property by means of false pretenses, representations or promises; and Second: That the person used the United States Postal Service by mailing, or by causing to be mailed, some matter or thing for the purpose of executing the scheme to defraud.



http://legal-dictionary.thefreedictionary.com/Mail+Fraud

A crime in which the perpetrator develops a scheme using the mails to defraud another of money or property. This crime specifically requires the intent to defraud, and is a federal offense governed by section 1341 of title 18 of the U.S. Code. The mail fraud statute was first enacted in 1872 to prohibit illicit mailings with the Postal Service (formerly the Post Office) for the purpose of executing a fraudulent scheme.

Initially, courts strictly followed the mail Fraud statute's language and interpreted it narrowly. The early decisions required a connection between the fraudulent scheme and the misuse of the mails for a violation of the mail fraud statute. Since its enactment, application of the statute has evolved to include dishonest and fraudulent activities with only a tangential relationship to the mails.

Punishment for a conviction under the mail fraud statute is a fine or imprisonment for not more than five years, or both. If, however, the violation affects a financial institution, the punishment is more severe: the statute provides that "the person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both."

Both the Supreme Court and Congress have consistently broadened the mail fraud statute since its enactment. Prior to a 1909 amendment, a violation of the mail fraud statute required proof, among other requirements, of either opening or intending to open correspondence or communication with another person. In 1909 Congress eliminated this requirement and replaced it with the language that the mails be used "for the purpose of executing such scheme or artifice or attempting so to do." This amendment followed the Supreme Court's decision in Durland v. United States, 161 U.S. 306, 16 S. Ct. 508, 40 L. Ed. 709 (1896), which held that the mailing only needed to "assist" in the completion of the fraud. Although this amendment was the last significant change until 1988, the Supreme Court has struggled with the relationship between the mailing element and the execution of the fraud.

The Court's struggle with this relationship is illustrated by two of its decisions: United States v. Maze, 414 U.S. 395, 94 S. Ct. 645, 38 L. Ed. 2d 603 (1974), and Schmuck v. United States, 489 U.S. 705, 109 S. Ct. 1443, 103 L. Ed. 2d 734 (1989). In Maze, the defendant stole his room-mate's credit card and car and signed his room-mate's name to the charge vouchers to obtain food and lodging. The merchants mailed the invoices to a bank in Louisville, Kentucky. The Supreme Court held that this did not fall within the scope of the mail fraud statute because the mailings did not perpetuate the fraud. The Court held that the scheme did not depend on the mailings and that the fraud was completed once the defendant signed the vouchers. The Court refused to interpret the statute as merely a jurisdictional requirement and stated that "Congress could have drafted the mail fraud statute so as to require only that the mails be in fact used as a result of the fraudulent scheme."

However, in Schmuck, the Court did expand the mail fraud statute. In Schmuck, the defendant sold used cars to auto dealers in which he had rolled back the odometers to inflate the vehicles' value. The dealers sent title application forms to the state department of transportation to register the cars after the dealers sold them to individual purchasers. The Court held that the sale of the vehicles depended on the transfer of title and that, although the mailing of the registration may not have contributed directly to the scheme, it was necessary for the passage of title and perpetuation of the scheme.

In recent years Congress has amended the mail fraud statute twice. In 1988 Congress added section 1346, which states that the term "scheme to defraud" includes a scheme to deprive another of the intangible right of honest services. In 1994 Congress expanded the use of the mails to include any parcel that is "sent or delivered by a private or commercial interstate carrier." As a result of these amendments, the mail fraud statute has become a broad act for prosecution of dishonest and fraudulent activities, as long as those crimes involve the mails or an interstate carrier.

Further readings

Brogan-Johnson, Rebecca L. 2001. "Defining 'Property' Under the Mail Fraud Statute." Loyola Law Review 47 (summer): 865-883.

Henning, Peter J. 1995. "Maybe It Should Just Be Called Federal Fraud: The Changing Nature of the Mail Fraud Statute." Boston College Law Review 36.

Hurson, Daniel W. 2001. "Mail Fraud, the Intangible Rights Doctrine, and the Infusion of State Law: a Bermuda Triangle of Sorts." Houston Law Review 38 (spring): 297-334.

Podgor, Ellen S. 1992. "Mail Fraud: Opening Letters." South Carolina Law Review 43.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.



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http://www.law.cornell.edu/uscode/html/uscode18/usc_sec_18_00001346...

TITLE 18 > PART I > CHAPTER 63 > § 1346

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§ 1346. Definition of "scheme or artifice to defraud"

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For the purposes of this chapter, the term "scheme or artifice to defraud" includes a scheme or artifice to deprive another of the intangible right of honest services.

 

 

I love that they have expanded the definition to include the "scheme or artifice to deprive another of the intangible right of honest services".

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Permalink Reply by Katie McCullin on March 22, 2011 at 10:45

Hi Judy -

 

My name is Katie McCullin, and I work for Chesapeake in the Haynesville Shale. I would really love to put you in contact with a representative at Chesapeake and talk about your issues. I know you've spoken to several others at our corporate office, but I implore you to give it one more shot. You can message me with your contact information, and I'll have someone call you tomorrow.

 

Thank you!

Katie

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Permalink Reply by JHH on March 23, 2011 at 2:44

Katie,

I don't think anyone really wants to see Chesapeake destroyed. You have a challenging job and hopefully it is enjoyable... maybe not so much these days.  Chesapeake's success is our success... at least it should be that way for mineral owners, stock holders and our country's energy needs.  But some serious questions need to be answered... as stated in previous discussions. Trust is on the line.  I've talked with Chesapeake representatives several times on the telephone when i could get them... exchanged emails and sent three certified letters in the past year.  I'm waiting for a response on the third certified letter.  And if the past is any indication, i don't expect any clarification.  But i'm hopeful.  

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Permalink Reply by Katie McCullin on March 23, 2011 at 3:30

I appreciate your patience and tenancity. Please don't hesitate to reach out to me if you run into a road block or feel you're not getting detailed enough explanations. I'm more than happy to help.

 

thanks!

Katie

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Permalink Reply by Henry on March 23, 2011 at 11:54

JHH,

I second what you say.  It is hard for CHK lessors to have any trust when they see their neighbors, who leased to other companies, getting higher prices on similar leases.

 

Having said that, I should note that I do hear a lot of good things about the people who answer at  CHK's 877 number.  I almost always hear that these people really try to get the caller's questions answered.  Sometimes it takes going back and forth a few times.  But they do seem to get the questions answered.  I've seen some of the back-and-forth emails, and I've been impressed with the level of detailed information that they will provide, if the caller presses for it.  The callers may not like the answers they get, but that's a different issue.  Based on what I hear from my survey respondents, I would urge anyone who doesn't understand their statement, or thinks he is not getting the right price, to start with the 877 number. 

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