John Edwards indicted over campaign sex scandal

The (Raleigh) News & ObserverJune 3, 2011 

RALEIGH — Federal prosecutors on Friday alleged that the lies of John Edwards and the cover-up of his affair and resulting pregnancy were a criminal conspiracy, charging the former North Carolina senator with seeking more than $900,000 in hush money in violation of campaign finance disclosure law.

Edwards answered the charges within hours, facing a bank of cameras and scores of reporters and onlookers by the steps of the federal courthouse in Winston-Salem. His oldest daughter, Cate, stood beside him.

“I did not break the law,” Edwards said. “And I never, ever thought that I was breaking the law.”

He did not take questions.

Moments before, Edwards – a longtime successful trial lawyer who made millions in civil jury verdicts – sat inside a courtroom at the defendant’s table surrounded by his elite legal team.

As the judge ticked through a series of questions about his rights, Edwards at one point flashed impatience.

Asked if he understood his right to remain silent, Edwards said: “Yes, sir, your honor, I am an attorney.”

His lead lawyer, former White House counsel Gregory Craig, said that Edwards would plead not guilty. Edwards was released without bond.

A hearing is set for next month for Edwards to formally enter a plea to the six charges: One count of conspiracy, one count of making false statements and four counts of accepting illegal campaign contributions.

Prosecutors said they brought the charges because no one is above the law: “We will not permit candidates for high office to abuse their special ability to access the coffers of their political supporters to circumvent our election laws,” said Assistant Attorney General Lanny A. Breuer.

Edwards’ legal team promised a vigorous courtroom fight.

A former chairman of the Federal Elections Commission issued a statement through Edwards’ legal team that called the charges “misguided” and based on an “erroneous” reading of the law. The commission administers campaign finance law.

“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,” said Scott E. Thomas, an FEC commissioner for 20 years.

It all amounted to day one of an Edwards trial after two years of secret probing by the FBI, IRS and prosecutors in Raleigh and Washington.

The charges came as forecast by widespread news reporting over the past week.

But it followed weeks of furious debate about the law between the sides and, ultimately, secret negotiations over a possible plea. A plea was under serious discussion almost until the moment the indictment was issued at midmorning.

Edwards had rejected deals to enter a plea to a felony charge, which would have spared a trial and an uncertain outcome.

The News & Observer has learned that Edwards also turned down a last-minute offer of a plea to three misdemeanor charges. Edwards rejected that deal because it still would have likely included some type of prison sentence, as much as six months, according to two people who were involved in the negotiations and refused to be identified because of the sensitive nature of the case.

A trial is not a certainty, as plea deals can still be reached after an indictment.

Friday’s charges were in a focused, 19-page indictment that did not include many new details about a case that has been followed widely nationally.

But there was one nugget: In the indictment, the government alleges that at least two campaign staffers will say that Edwards knew about the payments.

That directly contradicts public statements by Edwards and one of the donors that Edwards was ignorant about the money flow.

One of those staffers, Andrew Young, has written a book, appeared on national TV programs and is in a separate legal fight over a sex tape made of Edwards and the mistress, Rielle Hunter.

But the other person, who is not identified in the indictment by name and is described only as a former employee of the campaign, would apparently testify that Edwards knew money from Texas lawyer Fred Baron was being used to hide Hunter from the media, a core element of the prosecution. Baron was Edwards’ campaign finance chairman.

“Edwards told the employee that, during his presidential campaign, he was aware that [Baron] had provided money and made expenditures to support and hide [Hunter] from the media,” the indictment says. “Edwards further told the employee that this was a huge issue and that for ’legal and practical reasons’ it should not be mentioned...”

The indictment was issued from the Middle District of North Carolina, which covers the middle swath of the state. It is 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 from Winston-Salem.

The indictment says that the alleged conspiracy to hide the affair was part of a concerted plan by Edwards. Edwards had constructed an important campaign narrative as a “devoted family man” seeking the White House in 2008 and knew any revelation of his affair “would destroy his candidacy,” the indictment says.

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 Baron, the Texas lawyer (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 campaign to divert personnel and resources away from other campaign activities to respond to criticism and media scrutiny,” the indictment says.

In spare language, it lays out the allegations.

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

About that time, Young read a note that Mellon had sent to Edwards as he was enduring criticism for accepting $400 haircuts.

“The timing of your phone call on Friday was ’witchy,’ ” Mellon wrote. “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 years old last year. Edwards reportedly visited with Mellon as recently as last week at her home in Virginia, drawing the focus of prosecutors.

The judge on Friday ordered Edwards to not have any contact with Mellon while a trial is pending. Edwards also surrendered his passport and is not allowed to leave the United States.

After that note in early 2007, Mellon sent checks totaling $725,000 through a friend to Young, whose wife cashed the checks, the indictment said.

With those checks flowing, and Young and Hunter in hiding, Edwards in December, 2007, asked Young to claim paternity of Hunter’s child.

The indictment says that Edwards told Young that “efforts to win the presidency – and everything they had fought for – depended on it.”

Young did, and his own family soon 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 $1,000 in cash in an envelope marked, “Old Chinese saying: use cash, not credit cards!” Baron wired another $10,000 to a bank account controlled by Young, according to the indictment.

Separately, Young has said that Baron directly paid a builder of his home. The indictment does not mention those payments.

Baron, who died in 2008, had publicly acknowledged providing financial support to Young and Hunter as the scandal unraveled, but was adamant that Edwards did not know he was helping them hide. While Young and Hunter were fleeing the media, Edwards dropped out of the race on Jan. 30, 2008.

Still, 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 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 qualified as campaign donations — intended to save the campaign by keeping Edwards’ affair with Hunter secret — and thus illegal because it exceeded limits and went unreported on required disclosure forms.

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 were not illegal.

The U.S. Attorney in Raleigh, George Holding, said Edwards abused a system he wanted to take part in. “Democracy demands that our election system be protected, and without vigorously enforced campaign finance laws, the people of this country lose their voice,” Holding said.

(Staff writers Craig Jarvis, Barbara Barrett and Brooke Cain contributed to this report.) acurliss@newsobserer.com or 919-829-4840

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