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Edwards indicted over campaign sex scandal

RALEIGH, N.C. — John Edwards, a two-time Democratic presidential candidate and a former U.S. senator from North Carolina, was indicted Friday on charges of conspiracy and false statements and campaign law violations stemming from a sex scandal.

The indictment, which culminates a two-year federal probe, alleges that nearly $1 million that flowed from two wealthy Edwards supporters to pay costs for Rielle Hunter, his former mistress and mother of his now-3-year-old daughter, and campaign staffer Andrew Young qualify as illegal campaign contributions.

The purpose of the money was to protect Edwards’ self-proclaimed public image as a family man by keeping secret his extramarital affair with Hunter, the indictment said.

An arrest warrant was issued for Edwards, but he is expected to surrender to federal authorities and appear before a magistrate at 2:30 p.m. Eastern time in Winston-Salem, N.C., to hear the charges against him.

The indictment was issued from the Middle District of North Carolina, where Edwards lives and where many of the financial transactions occurred. A grand jury in Raleigh had been convened for months to hear the case. It expired, and the charges were issued in the new venue Friday.

The indictment charges that Edwards led a conspiracy with four others, labeled as Persons A, B, C and D, but clearly identifiable as former staffer Young (Person A), mistress Hunter (Person B), multimillionaire heiress Rachel “Bunny” Mellon (Person C) and Texas trial lawyer Fred Baron (Person D.)

“Edwards knew that public revelation of the affair and pregnancy would destroy his candidacy by, among other things, undermining Edwards’ presentation of himself as a family man and by forcing his camping to divert personnel and resources away from other campaign activities to respond to criticism and media scrutiny,” the 19-page indictment said.

Said U.S. Attorney General Eric Holder: “Democracy demands that our election system be protected, and without vigorously enforced campaign finance laws, the people of this country lose their voice. The U.S. Attorney’s Office and the Department of Justice are committed to the prosecution of individuals who abuse the very system of which they seek to become a part.”

In May 2007, Edwards and Young discussed people whom they could ask to financially support Hunter, who was pregnant, the indictment alleges.

About that time, Young read a note that Mellon had sent to Edwards: “The timing of your phone call on Friday was ‘witchy.’ I was sitting alone in a grim mood — furious that the press attacked Senator Edwards on the price of a haircut. But it inspired me — from now on, all haircuts, etc. that are necessary and important for his campaign — please send the bills to me. … It is a way to help our friend without government restrictions.”

Mellon is an heiress who lives in Virginia and turned 100 last year.

Over the next eight months, Mellon sent checks totaling $725,000 through a friend to Young, whose wife cashed the checks, the indictment said.

Mellon concealed the purpose of the checks by falsely filling the memos lines with items like “chairs” or “antique Charleston table” or “book case.” Young used the money for Hunter’s rent, furniture, car, medical care and other expenses.

In December 2007, Edwards asked Young to claim paternity of Hunter’s child, telling Young that “his efforts to win the presidency — and everything they had fought for — depended on it.”

Young did, and his family joined Hunter in hiding.

At that point, Baron began picking up the tab for Hunter and Young, spending about $183,000 on planes, hotels and rental houses as the unlikely couple jetted from Raleigh to Florida to Colorado and California, the indictment said.

Baron also gave Young $10,000 in cash in an envelope marked, “Old Chinese saying: use cash, not credit cards!”

While Young and Hunter were fleeing the media, Edwards dropped out of the race on Jan. 30, 2008.

Edwards continued to deny that he was the father of Hunter’s child. He also denied on national television that money was paid to hush up the affair: “I’ve never asked anybody to pay a dime of money, never been told that any money has been paid. Nothing has been done at my request. So if the allegation is that somehow I participated in the payment of money — that is a lie.”

The indictment also mentions an unnamed former staffer who worked with Edwards to craft a statement in which Edwards would admit he was the father of Hunter’s child, the indictment said.

Edwards told the former staffer that he knew during the campaign that Baron was paying to keep Hunter hidden from the media.

“Edwards further told the employee that this was a huge issue and that for ‘legal and practical reasons’ it should not be mentioned in the statement they were preparing,” according to the indictment.

In recent months, Edwards’ lawyers have tried to persuade prosecutors in the U.S. Justice Department’s Public Integrity Section to drop the investigation. Those efforts ended with Friday’s indictment, which starts an even tougher legal battle.

The Edwards legal team released a statement from former FEC chairman Scott E. Thomas, questioning the prosecution.

“A criminal prosecution of a candidate on these facts would be outside anything I would expect after decades of experience with the campaign finance laws,” Thomas said. “The Federal Election Commission would not support a finding that the conduct at issue constituted a civil violation much less warranted a criminal prosecution.”

The key questions of law in the case are whether payments to Hunter and Young were intended to keep Edwards’ 2008 presidential campaign alive, and whether Edwards knew about those payments.

The payments for Hunter never touched campaign accounts and weren’t reported on campaign disclosure forms.

Prosecutors are alleging that the money was campaign spending — intended to save the campaign by keeping Edwards’ affair with Hunter secret — and thus an illegal use of campaign funds.

Edwards’ lawyers, on the other hand, say that the money was intended merely to conceal the affair from Edwards’ late wife, Elizabeth, and was not connected to the campaign. As such, they argue, the payments weren’t illegal.

In his statement Friday, Thomas, who served as an FEC commissioner for 20 years, said he based his opinion on facts as presented most favorably to the government, including “that the payments were motivated in part by a desire to elect Senator Edwards to (the presidency).”

Thomas said he met with prosecutors in late April.

“These payments would not be considered to be either campaign contributions or campaign expenditures within the meaning of the campaign finance laws,” he said.

Investigators have been curious about Edwards’ relationship with Mellon, whom Edwards courted for financing during his second failed bid for the Democratic presidential nomination, in 2008.

Baron, a former Dallas trial lawyer who was finance chairman for the Edwards campaign, said before he died that he provided financial support to Young and Hunter.

The saga that led to Friday’s charges began when Hunter, a videographer, secured work with Edwards’ 2008 campaign in 2006 and 2007. According to campaign finance disclosures, she received $114,000 to film Edwards’ travels across America and abroad to raise awareness about poverty. Hunter’s “webisodes” were posted on the Internet.

When Hunter got pregnant in 2007, her role in Edwards’ world shifted.

Edwards, a trial lawyer himself, was elected U.S. senator from North Carolina as a political novice in 1998, defeating incumbent Republican Lauch Faircloth. He chose not to seek re-election in 2004, running for president instead. Eventual Democratic nominee John Kerry chose him as his running mate that year.

A South Carolina native, Edwards lives in Orange County, N.C. His wife died of cancer last December.

Edwards pleads not guilty to finance charges in NC

By TOM BREEN and NEDRA PICKLER – Associated Press

WINSTON-SALEM, N.C. — Former presidential hopeful John Edwards pleaded not guilty Friday to federal charges that he solicited and secretly spent more than $925,000 to hide his mistress and their baby from the public at the height of his 2008 White House campaign.

In a 30-second statement to dozens of reporters and television news cameras that surrounded him outside the courthouse, he said he never thought he was breaking the law.

“There is no question that I have done wrong,” he said. “And I take full responsibility for having done wrong. And I will regret for the rest of my life the pain and the harm that I have caused to others. But I did not break the law.”

Edwards did not have to post bond, but he had to surrender his passport and is not allowed to leave the continental U.S. He also can’t have contact with one of the wealthy benefactors who gave him money that prosecutors say was used to hide the affair.

The indictment contained six felony counts, including conspiracy, four counts of receiving illegal campaign contributions and one count of false statements for keeping the spending off the campaign’s public finance reports.

It said the payments made with money from two wealthy supporters were a scheme to protect Edwards’ presidential ambitions.

“A centerpiece of Edwards’ candidacy was his public image as a devoted family man,” the indictment said. “Edwards knew that public revelation of the affair and the pregnancy would destroy his candidacy.

Prosecutors said the spending was illegal because the 2004 Democratic vice presidential nominee should have reported it on public campaign finance filings and because it exceeded the $2,300 limit per person for campaign contributions.

Edwards’ lawyer, Gregory Craig, said there’s no way that anyone, including Edwards, would have known that the payments should be treated as campaign contributions.

“This is an unprecedented prosecution,” he said at the courthouse. “He has broken no law and we will defend this case vigorously.”

The case opens a new front in how the federal government oversees the flow of money around political campaigns.

Citizens for Responsibility and Ethics in Washington, a private watchdog group often critical of the Justice Department for failing to pursue wrongdoing by government officials, was a surprising critic of this prosecution. Executive director Melanie Sloan said the case was “remarkably weak.”

While Sloan called Edwards’ conduct despicable, she said the government case rests on finding the payments by Edwards’ two wealthy old friends to be campaign contributions “but no court has ever interpreted the definition of campaign contribution this broadly.”

WINSTON-SALEM, N.C. — Edwards’ defense team issued statements from experts who argued the payments were not campaign contributions. A former Federal Elections Commission chairman, Scott Thomas, said if the agency had investigated, it would have found the payments did not violate the law, even as a civil matter.

“A criminal prosecution of a candidate on these facts would be outside anything I would expect after decades of experience with the campaign finance laws,” Thomas said.

In recent days, Edwards’ team also argued that the secret spending was designed to hide the affair from his wife, Elizabeth, who died of cancer in December, and not to aid his campaign.

Negotiations between Edwards’ lawyers and prosecutors to settle on a charge to which Edwards was willing to plead guilty continued through Thursday, but proved fruitless, according to people with knowledge of the negotiations. Prosecutors had insisted on a plea to a felony, which would endanger his ability to keep his law license.

If convicted, Edwards faces a maximum penalty of five years in prison and a $250,000 fine on each of the six counts. First-time white collar offenders usually don’t receive prison terms in federal court, but the Justice Department typically presses for at least short prison sentences for public officials. While Edwards was a private citizen as a candidate, he was receiving taxpayer money for his presidential campaign.

The indictment was the culmination of a federal investigation begun by the FBI more than two years ago that scoured virtually every corner of Edwards’ political career, including his time as a U.S. senator, which ended seven years ago.

But the centerpiece has been the hundreds of thousands of dollars privately provided by two wealthy supporters – former campaign finance chairman Fred Baron and Rachel “Bunny” Mellon, the 100-year-old widow of banking heir Paul Mellon. That money eventually went to keep mistress Rielle Hunter and her out-of-wedlock baby in hiding in 2007 and 2008, during the apex of the Democratic nomination campaign.

The indictment cited $725,000 in payments made by Mellon and another $200,000 made by Baron. It said the money was used to pay for Hunter’s living and medical expenses and for chartered airfare, luxury hotels and nearly $60,000 in rent for a house in Santa Barbara, Calif., to keep her hidden from the public. Other than Edwards, no one was named in the indictment, but the descriptions of others make clear who they are.

Mellon sent her money through her decorator. The indictment said she listed items of furniture in the memo lines of checks – written in amounts of $10,000-$200,000 for “chairs,” “antique Charleston table,” and “book case” – to hide the true purpose. It said Baron gave an envelope with about $1,000 cash and a note that said, “Old Chinese saying: use cash, not credit cards!”

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