New indictment Marcellus Shale Northeastern Pennsylvania’s New Frontier

expected against
Cordaro, Munchak
By Joe McDonald
Staff Writer

Federal prosecutors are

expected to tweak a federal
indictment next month
against Lackawanna County
Commissioner A.J. Munchak
and former Commissioner Cordaro Munchak
Robert C. Cordaro in light of
if they are an elected official.
a recent U.S. Supreme Court
Defense lawyers have long
opinion that redefined the
complained the law was too
use of a favorite tool prosecu-
vague when it came to deter-
tors have widely used in pub-
mining exactly what trig-
lic corruption cases.
gered an honest services
Munchak and Cordaro have
fraud prosecution. DENNIS BRIGGS / THE CITIZENS’ VOICE

ENCANA DRILL SITE IN LAKE TWP. PROGRESSING

been notified through their
The court in essence said
lawyers that prosecutors will
honest services fraud only
ask a grand jury to return a
applies if a public official or Progress continued Wednesday at the Encana Encana conditional use to drill five more wells
superseding indictment
a corporate executive enrich- Oil & Gas USA Inc. natural gas drilling site on in Lake Township on a property owned by 4-P
against them in September.
es himself or herself by tak- Zosh Road in Lake Township. The ground has Realty, which is located near this site. Drilling is
In court papers filed Friday,
ing a bribe or a kickback. been cleared and the well pad is taking shape. under way at Encana’s first well on Route 118
Cordaro’s lawyer, William C.
The honest services fraud
Costopoulos, said he had Trees were removed and the access road is be- behind the Ricketts Glen Hotel in Fairmount
charge is woven throughout
recently been told by Assis- ing built. Gravel will be used to make the pad, Township. The company plans to have the Lake
the indictment against
tant U.S. Attorney Lorna Gra-
Munchak and Cordaro, start-
which will be removed when it is reclaimed Township well pad ready in time to bring the rig
ham that prosecutors will after the well is complete. On Tuesday the Lu- over as soon as drilling is complete at the Fair-
ing with the first eight
seek a new indictment in Sep- zerne County Zoning Hearing Board granted mount Township site.
counts, which allege honest
tember. Costopoulos’ court
services mail fraud and mail

Carrizo Oil partnership to boost operations in Pa.

filing asked for more time to
fraud. Counts nine through
prepare pretrial motions.
12 contain the same charges
Heidi Havens, a spokes-
against only Cordaro. In all,
woman for the U.S. Attor-
honest services fraud is listed
ney’s office, would not con-
firm if a new indictment will
14 times in the indictment
against Cordaro and nine
Gas extracted from Marcellus won’t be ance feels development isn’t
moving quick enough. If that
said. “We probably would not
have started drilling in the
be sought in September. is the case, the Indian com- Wyoming area with develop-
“We would have no com-
ment,” Havens said. Costo-
times against Munchak.
The Supreme Court ruling shipped overseas, company official says pany will help drilling opera-
tions in the central part of
ment wells until the third
quarter (without the deal).”
has already had an impact in By Patrick Sweet opment obligations to cover
poulos was not available for the state. Gas extracted from the
one local public corruption Staff Writer 75 percent of Carrizo’s costs
comment. “We could be drilling wells shale will not be sent overseas,
case. Last week, prosecutors through an anticipated two-
A grand jury indicted shoulder to shoulder or with- Hunter said. The process of
conceded their honest ser- Carrizo Oil & Gas Inc. has year program, according to a
Munchak and Cordaro in in the same county or town- liquefying natural gas and
vices fraud case against for- its foot on the gas pedal. Reliance news release.
March on racketeering, ship,” Hunter said. “More or shipping it across the globe is
mer Luzerne County Judge The Houston-based natu- “Reliance is excited about
income tax evasion and hon- less in the central region.” too expensive to justify.
Michael T. Toole had crum-

THE CITIZENS’ VOICE

est services fraud charges, ral gas company entered into the opportunity to further The additional capital may In late April, Reliance
bled. Toole had pleaded a joint venture with India- expand presence in the Mar-
among others. Cordaro and allow the company to add a entered into a similar agree-
guilty to accepting free use based Reliance Industries cellus Shale in the United
Munchak are accused of second drilling rig in Penn- ment with Pittsburgh-based
of a beach house on several Limited on Thursday that States,” Reliance President
pocketing kickbacks from sylvania, Hunter said. Effects Atlas Energy Inc. that includ-
occasions from 2005 to 2008, will provide the boost in capi- Walter Van de Vijver said in
contractors while they were of the deal won’t be felt until ed the transfer of 40 percent
and failed to report the gift tal Carrizo needs to acceler- the release.
the majority commissioners. next year, though. of the domestic company’s
on state-mandated financial ate its drilling operations in Carrizo will hold 40 per-
If convicted, Cordaro, 48, “This relationship will shale interest.
disclosure forms. Toole, who Pennsylvania. cent interest in roughly
faces up to 364 years in pris- have no effect on 2010,” Hunt- “We are pleased to estab-
had faced up to 20 years in “We had a very large lease- 104,400 acres in central and
on and a $7.7 million fine; er said. “It will have an effect lish a long-term partnership
prison, is now awaiting sen- hold in the Marcellus that Northeastern Pennsylvania;

SATURDAY, AUGUST 7, 2010 – 5

Munchak, 64, up to 193 years on 2011. That’s when the with Carrizo, which has dem-
tencing only on a tax count would have taken us many Reliance will hold the
and $3.2 million in fines. acceleration in our drilling onstrated operating expertise
that could send him to prison years to develop,” Richard remainder. Carrizo originally
Munchak and Cordaro have will really take effect.” in the shale plays,” Van de
for months. Hunter, Carrizo vice-presi- split the interest in the min-
pleaded not guilty and are Carrizo plans on ramping Vijver said. “The proposed
Unlike Toole, Cordaro and dent of investor relations, eral rights 50-50 with Avista
awaiting trial, probably next up drilling operations in joint venture will supplement
Munchak are alleged to have said. “… So we sold a portion Capital Partners. Avista sold
year. Wyoming County during the strengths achieved through
taken large amounts of cash. of them and will use the cash all of its interest and Carrizo
Before the Supreme Court second half of 2011, Hunter our recent joint ventures and
Prosecutors claim to turn around and invest in sold 20 percent.
decision in June, honest ser- said. further expands our footprint
Munchak took about $30,000 development.” Despite holding the minor-
vices fraud was broadly “Wyoming (County) devel- in North American shale gas
in cash on two occasions, and The deal, worth $392 mil- ity interest, Carrizo will still
defined as someone’s putting opment will be initiated after operations.”
Cordaro took about $30,000. lion, includes $340 million of maintain control of develop-
his or her self-interest above our Susquehanna County
the public interest, especially cash and $52 million of devel- ment operations unless Reli- drilling is initiated,” Hunter psweet@citizensvoice.com, 570-821-2117
jmcdonald@timesshamrock.com

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