Crime and Punishment

What happens to legal case now that McClendon is dead?

McClendon mystery deepens

Aubrey McClendon's shocking death Wednesday ended the criminal bid-rigging case against him. But it doesn't mean that anyone else who allegedly broke the law with the ex-Chesapeake Energy co-founder and CEO — or others in the same industry — is off the hook.

McClendon, 56, died in a fiery car crash just a day after being charged in a federal indictment accusing him of conspiring to violate federal antitrust law by rigging bids to buy oil and natural gas leases in northwest Oklahoma from late 2007 through 2012, when he ran Chesapeake Energy, the nation's second-largest natural gas producer.

A law enforcement source told CNBC that the Justice Department is expected to dismiss the case against McClendon, though the exact timetable is not certain.

However, the source said that the broader federal antitrust investigation involving oil and gas industry leasing is ongoing.

McClendon was defiant immediately after the indictment. "I will fight to prove my innocence and to clear my name," he said. Less than 24 hours later, police said he drove "straight into a wall" on a highway embankment in Oklahoma City at high speed while not wearing a seat belt.

Aubrey McClendon, former chairman and chief executive officer of Chesapeake Energy.

The indictment against McClendon, in the second paragraph, claims that he had a co-conspirator, who is as of now unnamed. However, the alleged co-conspirator was identified as being the CEO and chairman of the board of another company, also unnamed.

Bloomberg News, citing multiple sources familiar with the matter, reported that SandRidge Energy is the unnamed company in the indictment, and noted that Tom Ward was CEO of the Oklahoma City company during the time period cited in the indictment. A spokesman for SandRidge Energy did not respond to a request for comment from CNBC.

Ward, who also had co-founded Chesapeake Energy and served as its president, is now CEO and chairman of Tapstone Energy in Oklahoma. A message seeking comment from a Tapstone spokesman has not yet been returned.

The U.S. Justice Department's press office has not yet returned a call seeking comment.

Harry First, a New York University law professor who once headed the New York attorney general's antitrust bureau, said it is possible that McClendon's alleged co-conspirator will escape prosecution now that McClendon is dead.

"I don't know whether they'll ever be charged," he said.

First said it is possible that the alleged co-conspirator testified against McClendon before the grand jury that ended up indicting him. If he had testified, First said, the conspirator would have been granted immunity from his own testimony being used against him as part of a separate prosecution. Chesapeake Energy has itself received immunity from prosecution as a result of its cooperation in the case, according to the company.

But, First also said the co-conspirator may also have agreed to a deferred prosecution agreement, under which they would cooperate with authorities to build a case against McClendon and then be willing to testify against him at trial.

Under that scenario, that person could be on the fast track to pleading guilty, as opposed to waiting to resolve the case until after McClendon's now nonexistent trial.

Darren Bush, a University of Houston law professor who previously worked as a trial attorney in the Justice Department's antitrust division, said the way the indictment is written by prosecutors "indicated they targeted McClendon as having initiated the conspiracy."

That makes it more likely, Bush said, that McClendon "was the big fish" prosecutors were after, and less likely that he was being charged in hopes that he would then agree to cooperate with a case against his unnamed co-conspirator to get leniency for himself.

Instead, Bush said, it's probable that the co-conspirator had agreed to testify against McClendon at trial, and then plead guilty afterward.

If the co-conspirator hadn't made such an agreement, he likely would have been charged and named in the same indictment as McClendon's, Bush said.

Ex-Chesapeake Energy CEO indicted on conspiracy charges
Aubrey McClendon, former Chief Executive Officer, Chairman, and Co-founder of Chesapeake Energy Corporation.
Police: McClendon crashed traveling at 'high rate of speed'

Bush said of that conspirator "it's likely they will plead guilty" fairly soon now that their cooperation against McClendon is no longer necessary.

"They'll likely emerge, if they're fully cooperating, relatively unscathed," Bush said. "Usually if you cooperate with the DOJ you're probably not going to be facing much if any jail time at all."

Bush also said that McClendon's death "is really, really disturbing," particularly because he likely would have done well even if he had been convicted.

"Most people, when they get out of 'Club Fed' [prison for white-collar criminals] from a price-fixing conspiracy, they kind of land on their feet, go into consulting," or even get hired back by their former companies, Bush said.

He said the case against McClendon and his co-conspirator is a sober warning for people in the oil and gas industry.

"If you're in an industry and the Justice Department has found that there has been some sort of price rigging or bid rigging taking place, then you better be on your best behavior for a while," Bush said.