Sean Gardner / Reuters Chesapeake Energy CEO Aubrey McClendon.

Aubrey McClendon, the billionaire CEO of natural gas giant Chesapeake Energy, opened his company’s first-quarter conference call on Wednesday by describing the last two weeks as “very challenging.” That may be an understatement — the last 48 hours alone have been dizzying.

Last week, the Securities and Exchange Commission opened a probe into a billion-dollar personal loan tied to McClendon’s controversial compensation plan, which he now stands to lose, along with the title of board Chairman. Then on Wednesday, Reuters published a startling expose revealing that McClendon ran a $200 million hedge fund trading oil and gas at the same time he was leading the energy giant — raising questions of conflict-of-interest. And now, a U.S. Senator has called for the Justice Dept. to investigate Chesapeake for potential “fraud, price manipulation, conflicts-of-interest, or other illegal activities.” Meanwhile, McClendon has bet the future of Chesapeake, which is carrying over $12 billion in debt, on a rise in natural gas prices that not one analyst polled by Bloomberg — zero — expects will happen.

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The 52-year-old McClendon now finds himself at the center of a rapidly-unfolding imbroglio that has raised serious questions about the health of the nation’s second largest natural gas producer. It’s been a vertigo-inducing comedown for a once high-flying energy executive credited with leading the shale-gas mega-boom of the last few years. Chesapeake shares plunged nearly 15% Wednesday.

McClendon, who co-founded Chesapeake in 1989 with a $50,000 investment, is an outspoken and polarizing figure in the energy industry, a self-made billionaire committed to a vision of full-speed-ahead natural gas extraction that has earned him both admirers and critics. He proudly describes Chesapeake as “the biggest frackers in the world,” a reference to hydraulic fracturing, the controversial practice of pumping highly pressurized water and sand into the ground in order to release natural gas. McClendon’s success is due in large part to riding the fracking boom of recent years, and dramatically expanding its use.

McClendon has been described as “an influential right-wing power broker,” but he hasn’t been hesitant about spreading his money around if it suits his business goals. In February, TIME‘s Bryan Walsh revealed that between 2007 and 2010, the Sierra Club accepted over $25 million in donations from the gas industry, mostly from McClendon, to help fund the Club’s Beyond Coal campaign.

In two decades, Chesapeake — which describes itself as “America’s Champion of Natural Gas” — has grown from a handful of employees into the nation’s second largest natural gas producer (after Exxon Mobil), with 10,000 workers drilling vast tracts of land, and over $11 billion in revenue last year. But the company has been buffeted lately due to the dramatic decline in natural gas prices thanks to the discovery of huge fields of shale gas, which have flooded the market with supply. Natural gas prices have dropped 50% in the last year, recently hitting their lowest point since 2001, though they’ve edged up lately. Chesapeake Energy shares have fallen by 36% over the past year. In February, the company said that its revenues would fall over $2 billion short of expenses this year.

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But while other producers have started to curtail production to ease the glut of gas on the market, Chesapeake increased production 18% in the first quarter even as the price as plummeted, according to The Wall Street Journal. That’s consistent with a massive bet that McClendon has engineered for Chesapeake that natural gas prices will go up, as Christopher Helman described in a Forbes profile of the CEO from last October.

Over the past five years Chesapeake has entered into 600,000 leases covering 9 million acres, paying out $9 billion in lease bonuses to landowners in the process—so much land that it would take Chesapeake 30 years to drill it all. And the more new shale plays uncovered, the more land McClendon continues to acquire. Chesapeake has piled on $10 billion in long-term debt and raised billions more through financial finagling to gobble up its acres. McClendon argues it’s money well spent because there’s only a small window to get good acreage for low prices. As Jeff Mobley, his investor relations spokesman, explains: “If we lived within cash flow we’d miss the opportunity.”

“As with other levered financial concoctions, that dicey strategy works only if the price of the underlying asset stays high,” Helman wrote. Take one look at this chart. As Chesapeake’s financial situation has deteriorated the alarm-bells have grown louder. Here’s an excerpt from a March Rolling Stone story on the company by Jeff Goodell.

According to Arthur Berman, a respected energy consultant in Texas who has spent years studying the industry, Chesapeake and its lesser competitors resemble a Ponzi scheme, overhyping the promise of shale gas in an effort to recoup their huge investments in leases and drilling. When the wells don’t pay off, the firms wind up scrambling to mask their financial troubles with convoluted off-book accounting methods. “This is an industry that is caught in the grip of magical thinking,” Berman says. “In fact, when you look at the level of debt some of these companies are carrying, and the questionable value of their gas reserves, there is a lot in common with the subprime mortgage market just before it melted down.” Like generations of energy kingpins before him, it would seem, McClendon’s primary goal is not to solve America’s energy problems, but to build a pipeline directly from your wallet into his. (Update 5/4: Berman disputes this quote.)

(Both Helman and Goodell have been following the Chesapeake situation closely and their recent posts are well-worth reading.)

On Wednesday, McClendon, who earned $17.9 million last year, was forced to apologize for a series of developments that have thrown his company into near-chaos. During the conference call, McClendon said he was “deeply sorry for all the distractions of the past two weeks.” He also referred to media reports as “misinformation,” adding: “Your mother told you not to believe everything you read or hear for good reason, and that’s certainly been the case for the past two weeks.”

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Here’s a timeline of the last two weeks in this fast-developing story:

On April 18, Reuters reported that McClendon had received over $1 billion in loans over the last three years, secured by his stake in Chesapeake’s oil and gas wells. The loans — some of which came from investment firms that did business with Chesapeake — were not disclosed to the company’s shareholders. McClendon reportedly used the loans to finance more personal stakes in the company’s wells. In a program called the Founder Well Participation Program (FWPP), McClendon was allowed to buy a 2.5% stake in every one of the company’s thousands of wells. The report caused Chesapeake shares to fall 5.5%.

Last week, the Securities and Exchange Commission opened an informal investigation into McClendon’s controversial well-stake compensation plan. Facing growing scrutiny, the company said it would not extend the plan beyond its scheduled end in 2015, and said it would increase disclosure of the program. Meanwhile, ratings agency Standard & Poor’s lowered Chesapeake’s credit rating, which had already been at “junk” status.

Last Friday, in another exclusive, Reuters reported that now-retired Chesapeake board member Frederick Whittemore lent money to McClendon in the late 1990s, at a time when Whittemore was responsible for helping decide how much McClendon should receive as CEO of the company. The report raised questions about the propriety of the relationship.

On Monday, The Wall Street Journal reported that the Internal Revenue Service is also looking into the FWPP.

On Tuesday, Chesapeake announced it would replace McClendon with an independent chairman and prematurely end the FWPP program. Investors cheered the news, sending the company’s stock up 7%. But the positive feeling did not last long: Hours later, after the market closed, the company reported disappointing earnings with a net loss of $71 million.

Then, on Wednesday, in a potentially explosive development, Reuters reported that from 2004 through 2008, McClendon ran a $200 million hedge fund that traded in the very same commodities that Chesapeake produces. McClendon’s hedge fund traded oil and gas contracts at the same time he was privy to potentially market-moving information in his role as Chesapeake CEO. Taken with the disappointing earnings report, the story helped prompt a 14% plunge in the company’s stock and added further uncertainty to McClendon’s future.

Finally, late Wednesday, U.S. Sen. Bill Nelson, the Florida Democrat, asked the the Justice Dept. to investigate Chesapeake for potential “fraud, price manipulation, conflicts-of-interest, or other illegal activities.” Another lawmaker, Sen. Bernie Sanders, the Vermont Democrat, said: “We… have got to prevent the obvious conflicts of interest that this report exposes and make our energy markets more transparent.”

Reuters‘ two-part investigation — which is worth reading in its entirety and deserves an award — found no evidence that McClendon used inside knowledge from Chesapeake to make hedge fund trades, but it cites experts on energy trading, corporate governance and commodity-market regulation who were described as “stunned by the latest revelation.” A Chesapeake spokesperson did not return phone and email requests for comment.

If the last two weeks have been dramatic, the last 48 hours have been escalating like an out-of-control wildfire. It remains to be seen whether further damaging information about McClendon’s personal financial dealings will be revealed. What does seem clear is that Chesapeake’s board has gotten spooked, and is taking steps to reduce McClendon’s once-dominating role at the company. But given the terms being used — “fraud, price manipulation, conflicts-of-interest” — this saga may quickly move out of the boardroom and into the legal arena.

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