Edwards Pleads Not Guilty to Charges of Accepting Funds to Conceal Affair

John Edwards, the two-time U.S. presidential candidate and former North Carolina senator, pleaded not guilty to charges of accepting more than $925,000 in illegal campaign contributions to hide an extramarital affair.

A U.S. grand jury indicted Edwards, 57, on six counts, including conspiracy and making false statements. At a federal court hearing yesterday in Winston-Salem, North Carolina, Edwards was ordered released while he awaits trial and to surrender his passport. He is restricted to travel within the continental U.S.

“There’s no question that I’ve done wrong,” Edwards said after the hearing. “I take full responsibility for having done wrong. I will regret for the rest of my life the pain and the harm that I’ve caused others. But I did not break the law. And I never, ever thought that I was breaking the law.”

Edwards, a Democrat, was the subject of a two-year investigation into whether he used the funds to conceal his relationship with filmmaker Rielle Hunter, with whom he had a child, while running for president in 2008. The donations came in 2007 and 2008 and were part of an effort to prevent public revelations that would undermine his presidential campaign, according to the indictment filed yesterday.

Edwards’s Lawyer

“No one has ever been charged, either civilly or criminally, with the claims that have been brought against Senator Edwards,” Gregory Craig, an attorney for Edwards, said in an e-mailed statement before yesterday’s hearing. “No one would have known, or should have known, or could have been expected to know, that these payments would be treated or should be considered as campaign contributions.”

Craig, a partner at the Washington office of New York-based Skadden, Arps, Slate, Meagher & Flom LLP, served as White House counsel to U.S. President Barack Obama.

Edwards publicly acknowledged the relationship with Hunter in August 2008. A lawyer who served in the Senate from 1999 to 2005, Edwards was Massachusetts Senator John Kerry’s running mate in the 2004 presidential election. In January 2008, he withdrew as a presidential candidate, later revealing his affair after a newspaper reported that he fathered Hunter’s daughter.

In an interview with ABC News in August 2008, Edwards said the relationship with Hunter began in 2006 after he met her in a bar in New York. He later hired her to produce Web videos for his campaign. Edwards, who has denied providing money to Hunter, claimed paternity of her child in 2009.

In a 2009 book, Elizabeth Edwards said her husband confessed the affair to her in the final days of 2006, after returning home from a tour announcing his second run for president.

Elizabeth Edwards died in December after a six-year battle with breast cancer.

Federal Election Act

The Federal Election Act limits the amount individuals may contribute to candidates. The most an individual could contribute in the 2008 presidential primary was $2,300.

Edwards accepted about $725,000 from one person and more than $200,000 from another, according to the indictment.

The payments at issue were used to cover Hunter’s rent, medical visits and prenatal expenses, in addition to travel and hotel accommodations to hide her from the public, according to the indictment.

Edwards emerged on the national scene in 1998 when, with little experience in politics, he defeated North Carolina Republican Senator Lauch Faircloth. Shortly after being sworn into office, the Senate’s Democratic leaders tapped him to help defend President Bill Clinton during impeachment proceedings.

Single Term

Edwards gave up his Senate seat after a single term to run for what would be the first of two failed presidential campaigns.

Though he had made millions of dollars as one of North Carolina’s top trial lawyers, Edwards ran populist campaigns in which he railed against the divide between rich and poor --“Two Americas,” he called it -- while frequently referring to his father’s work in a textile mill.

One former federal prosecutor said the government may have a difficult time proving its case against Edwards as juries are often willing to forgive indiscretions involving extramarital affairs.

“Juries are loath to convict a public figure for mistress- related crimes,” said Ken Julian, now with Los Angeles-based Manatt Phelps & Phillips LLP. “Even if he did step over the line, I think they’ll have a hard time pulling the trigger.”

Edwards appeared calm at yesterday’s hearing, laughing and smiling with his team of lawyers. He sparred with U.S. Magistrate Judge Patrick Auld as he was read his rights.

‘I’m an Attorney’

“I know what my rights are. I’m an attorney,” Edwards said.

“Well, I’m still obligated to tell you what they are,” Auld responded.

As a condition of his release, Edwards agreed not to have any contact with Rachel “Bunny” Mellon, a 100-year-old multimillionaire heiress who is scheduled to testify as a witness in the case. ABC News reported in February that Mellon, the widow of banking heir Paul Mellon, gave more than $4 million to organizations and political committees supportive of Edwards’ bid for the 2008 presidential campaign.

Someone identified only as Person C in the indictment wrote more than $700,000 in personal checks made payable to a friend and falsely listed in the memo lines that the checks were for furniture such as an antique Charleston table.

‘All Bills’

Edwards and a former campaign aide allegedly solicited money from Person C in May 2007 after receiving an e-mail from her asking Edwards to forward “all bills” necessary and important for his campaign, according to the indictment. Person C wrote the e-mail after media reports about Edwards and a $400 haircut. Sending bills directly to Person C, that person said in the e-mail, was a “way to help our friend without government restrictions,” according to the indictment.

Another donor, identified as Person D, also funneled money to Hunter, paying for more than $80,000 in chartered flights between Raleigh, North Carolina; Aspen, Colorado; Fort Lauderdale, Florida; and Santa Barbara, California, in December 2007 and January 2008, according to the indictment. Person D also paid more than $58,000 to rent a house in Santa Barbara in January 2008, according to the indictment.

In August 2009, Edwards allegedly confessed to a former campaign employee that he was aware Person D had provided money to support and hide Hunter from the media, according to the indictment. Edwards allegedly told that employee that “for legal and practical reasons,” a statement he prepared admitting he fathered Hunter’s child shouldn’t mention that fact, prosecutors said in the indictment.

‘Erroneous Reading’

A statement from Scott E. Thomas, a former chairman of the Federal Election Commission, identified the two donors as Mellon and Fred Baron. Thomas, who was retained by lawyers for Edwards as an expert witness, said an indictment of the former presidential candidate is “far-reaching” and an “erroneous reading” of the federal election law.

“These payments would not be considered to be either campaign contributions or campaign expenditures within the meaning of the campaign finance laws,” Thomas said in an e- mailed statement. “The criminal prosecution of a candidate on these facts would be outside anything I would expect after decades of experience with campaign finance laws.”

Former federal prosecutor Robert Mintz, now a partner with McCarter & English LLP, said the government’s case will hinge on Edwards’ involvement.

Key to Case

“The key to the government’s case here will not be so much about proving what was done to protect the Edwards’ campaign, but proving that it was done with his knowledge and complicity,” Mintz said.

The Edwards case is being handled by the U.S. Attorney’s Office in Raleigh and the Justice Department’s Public Integrity Section. The public integrity unit came under scrutiny for its handling of the corruption case against the late Senator Ted Stevens, an Alaska Republican. Attorney General Eric Holder, after discovering prosecutors improperly withheld evidence from defense lawyers about a key government witness, asked that Stevens’s conviction be thrown out in 2009.

The Stevens case led to a shakeup in leadership of the section and to new training programs for federal prosecutors. John “Jack” Smith, a career federal prosecutor, was brought in to lead the section in March 2010.

The case is U.S. v. Edwards, 11-00161, U.S. District Court, Middle District of North Carolina (Greensboro).

To contact the reporters on this story: Sophia Pearson in Philadelphia at spearson3@bloomberg.net; John Peragine in Winston-Salem, North Carolina at drjohnnd@hotmail.com; Jerry Adams in Winston-Salem, North Carolina at jjadams@bellsouth.net

To contact the editors responsible for this story: Mark Silva at msilva34@bloomberg.net; Michael Hytha at mhytha@bloomberg.net

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