John Edwards Faces Federal Investigation
By Alec MacGillis
As John Edwards, the former senator, prepared for his second presidential run, he paid for advisers and burnished his image through a bevy of political action committees and nonprofit groups.
Now, those groups are among the potential targets for a federal investigation into Edwards' finances as he continues to face the fallout from his affair with a videographer who documented his travels between the two presidential bids. Since Edwards admitted the affair last year, questions have swirled about the $114,000 that one of his organizations paid to the woman, as well as about money that a wealthy Edwards supporter paid to help move her and her baby from North Carolina to California.
Edwards acknowledged over the weekend that a federal investigation was underway. "I am confident that no funds from my campaign were used improperly," he said. "However, I know that it is the role of government to ensure that this is true. We have made available to the United States both the people and the information necessary to help them get the issue resolved efficiently and in a timely matter. We appreciate the diligence and professionalism of those involved and look forward to a conclusion." A spokeswoman for the U.S. Attorney's office in Raleigh declined to comment on the inquiry.
The investigation only adds to the troubles faced by Edwards, who has all but withdrawn from public since admitting the affair in August, save for showing up to watch University of North Carolina basketball games. His hopes of joining President Obama's Cabinet fell away. His family's considerable wealth is invested mainly with Fortress Investment Group, a hedge fund that has fared particularly poorly this year. His wife Elizabeth, who is battling breast cancer, is publishing a memoir in which she describes the pain caused by the affair and declares the videographer, Rielle Hunter, as "pathetic."
Edwards' political action committee, One America, paid Hunter a total of $114,000 for videos she shot of Edwards in 2006 that sought to show his offbeat side as he traveled the country promoting his anti-poverty plans. The last of those payments, for about $14,000, was made in April 2007 right around the time that Edwards' campaign paid One America, which was nearly out of funds at that point, about $14,000 for what was listed as a furniture expense.
After Edwards admitted the affair, his biggest financial supporter, Texas trial lawyer Fred Baron, told the Dallas Morning News that he had paid Hunter so she could get "out of North Carolina" and "into a stable place" in California, where she and her baby moved into a Santa Barbara home worth $3 million. Baron died two months later.
In addition to One America, Edwards-related organizations that sprung up after the 2004 election included the Center for Promise and Opportunity, through which he paid for his travel and aides' salaries; a related foundation that paid for a college tuition charity in Greene County, N.C., which Edwards touted on the campaign trail but shut down the same month the affair was revealed; an anti-poverty center at the University of North Carolina that is still holding occasional events; and a so-called 527 group that paid for pro-Edwards ads during the 2008 primaries and was fueled by six and seven-figure gifts from the Service Employees International Union and Bunny Mellon, the 98-year-old heiress.
Experts on campaign finance law say investigators are likely looking at whether there were false reports in how funds from Edwards' campaign or one of these groups were spent, whether any money was passed from the recipient to Hunter, and whether any campaign or nonprofit money was spent on providing a personal benefit.
"If there is a contribution going through an intermediary and they did not report the ultimate recipient that is gong to be a big no-no," said Sheila Krumholz, director of the Center for Responsive Politics. "If there is an attempt to cover up the true purpose of an expenditure, that could potentially be a big problem."
Posted at 6:48 PM ET on May 4, 2009
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