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Edwards' defense will have to explain away donor's 'smoking gun' note

John Edwards' lawyers signaled Friday that they will vigorously contest the indictment charging the former presidential candidate with accepting more than $900,000 in illegal campaign contributions from two wealthy donors in order to cover up his extramarital affair while running for president.

But their case could be undercut by a "smoking gun" note obtained by prosecutors and cited in the indictment. That document suggests that one of the donors, heiress Rachel “Bunny” Mellon, who is now 99 years old, was  trying to protect Edwards' presidential campaign -- and circumvent federal campaign laws -- when she agreed to make more than $700,000 in payments that were used to pay the expenses of Rielle Hunter, a campaign videographer who was pregnant with Edwards' child. 

After a public blow up over disclosures in April 2007 that Edwards had paid $400 apiece for two haircuts from a celebrity hairstylist in Beverly Hills, Calif., Mellon had written: "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."

Edwards' high powered legal team -- headed by former White House counsel Gregory Craig -- intends to argue that the payments that Mellon and another wealthy donor, Texas lawyer Fred Baron -- made for Hunter's benefit were not campaign expenses. Instead, they will say, they were designed to help their friend, Edwards, during an embarrassing personal crisis.

(Edwards pleaded not guilty to the charges Friday in Winston-Salem, N.C.)

Scott Thomas, a former Federal Election Commission chairman hired by Edwards lawyers, said in a statement on Friday that the indictment is "without precedent in federal election law" and is based on an "erroneous reading" of federal election law.

He said the payments charged in the indictment "would not support a finding that the conduct issue constituted a civil violation much less warranted a criminal prosecution."

Read more reporting by Michael Isikoff in 'The Isikoff Files'

Pat Fiori, who served as Edwards' top campaign lawyer, said in a separate statement that she was never consulted about the funds that Edwards solicited from Mellon and Baron for Hunter, who became pregnant with Edwards' child during his run for the White House.

But if she had been, Fiori said, "I would have advised that based upon" all FEC opinions at the time, "the payments for Ms. Hunter's expenses were not campaign contributions."

The two statements signal the focus of Edwards' lawyers' efforts will be on contesting the legal basis of the indictment, rather than contesting the basic facts outlined by the indictment. 

But the indictment includes some evidence that could prove difficult for Edwards' lawyers to explain in their efforts to argue that the payments for Hunter were solicited for purposes that were unrelated to protecting his viability as a presidential candidate.

Most damning of all is the note that Mellon wrote to Andrew Young, Edwards’ longtime personal aide and a key witness for the government, after the furor over  Edwards $400  haircuts -- a disclosure that embarrassed the candidate and put his campaign on the defensive.

"I was sitting alone in a grim mood-furious that the press attacked Senator Edwards on the price of a haircut,” she wrote, according to the indictment. “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."

After Mellon sent the note, Edwards and Young began soliciting additional payments from her in May 2007, when they learned that Hunter was pregnant with Edwards' child, according to the indictment.

Mellon -- who had already contributed $2,300, the maximum allowable under federal law to Edwards presidential campaign -- made payments between June 7, 2007 and Jan. 23, 2008 that totaled $725,000 in ways that the indictment alleges were designed to hide their true purpose.

Mellon wrote personal checks to a friend, falsely stating they were intended to buy items of furniture, according to the indictment. These checks were then forwarded to Young's wife, who endorsed them in her maiden name and deposited them into the Youngs' bank account so they could be used for Hunter's rent, furniture, car living expenses and prenatal care, the indictment states.

Separately, the indictment charges, Baron – who was the Edwards campaign finance chair -- later arranged to spend $200,000 for Hunter's benefit, flying her on chartered air flights to Fort Lauderdale, Fla., Aspen, Colo., and San Diego and paying her bills at luxury hotels such as the Loews Coronado Bay in San Diego and the Four Seasons in Santa Barbara. These flights and hotel stays took place while Edwards was campaigning in Iowa during the Iowa caucuses and was still considered a viable contended for the Democratic presidential nomination.  

Baron also provided cash directly to Young for Hunter's benefit, giving him $1,000 in an envelope in December 2007 that included a note that read, "Old Chinese saying: use cash, not credit cards!" according to the indictment.

The purpose of these payments, according to the indictment, was to preserve "a centerpiece of Edwards' candidacy": his "public image as a devoted family man." It further states that "the communication strategy developed by Edwards' campaign stressed the importance of publicizing, among other things, “that (Edwards') family comes first."

The key issue, according to campaign lawyers, is whether the federal judge who is assigned the case accepts the Justice Department's theory that such expenditures should have been reported as campaign contributions and were not primarily personal expenses designed to hide Edwards' extramarital affair from his wife, Elizabeth.

Justice Department officials signaled they are planning to push the issue hard. They also moved to undermine another expected line of attack on the indictment from Edwards' legal team -- that the investigation and prosecution was being pushed by the U.S. Attorney in North Carolina, George E.B. Holding. Holding, a Republican holdover appointed by President George W. Bush, had a political vendetta against Edwards, sources close to Edwards’ legal team have argued. (The indictment was co-signed by Robert J. Higdon, a veteran career prosecutor in the U.S. Attorney's office in North Carolina, and David. V Harbach, a trial lawyer in the public integrity section in Washington, D.C.)

In the Justice Department press release announcing the indictment, Lanny Breuer, the assistant attorney general in charge of the criminal division and an appointee of President Barack Obama, is prominently quoted first.

"As the indictment shows, we will not permit candidates for high office to abuse their special ability to access the coffers of their political supporters to circumvent our elections laws," Breuer said.