CHAPEL HILL (WTVD) — The Edwards house in Orange County is a house divided – divided by infidelity, and former presidential candidate John Edwards acknowledges federal investigators are now probing his affair with Rielle Hunter.
Frank Perry spent 22 years with the FBI and is familiar with political corruption cases. He’s now retired and works for a non-profit in downtown Raleigh called – the Foundation for Ethics in Public Service.
While the feds are not commenting on the investigation, Perry explained to Eyewitness News how the case will proceed.
“It is the FBI that makes a determination of that allegation, to see if it’s credible, specific and coherent enough to proceed,” he said. “I think many people wrongly believe US attorneys generate public corruption cases, but the initiation, the vetting, the working of the case, the FBI is driving that train and it’s done with a true abundance of caution, fairness, and you want to be as firm and fast as you are fair.”
In 2006 and 2007, Edwards’ political action committee paid Hunter $114,000 to produce videos of Edwards. Federal investigators are trying to figure out if those payments violated federal law.
Perry is not connected to the Edwards investigation, but says political corruption cases focus on a federal law – called “honest services fraud”.
“Honest services means that a public official has done something that deprives the citizens of the honest services they expect from public officials,” he explained.
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“It can take some time to build a case,” he said. “And [an] honest services case can take a lot of effort and can be extremely time consuming with respect to going through the financial records and following that money.”
While it appears the investigation is being conducted in Raleigh, Perry says political corruption cases have a lot of oversight – from both FBI headquarters in Washington and the Justice Department in Washington.
May 7, 2009
Fed investigation into “honest services fraud”
May 3, 2009
Investigators dig through records to see if donors’ money was used to cover up affair with campaign worker
Federal investigators are sifting through the records of money that helped John Edwards’ presidential campaign to determine if any was used to keep quiet his affair with Rielle Hunter.
Edwards, a Democrat and former U.S. senator, acknowledged the investigation to The News & Observer.
“I am confident that no funds from my campaign were used improperly,” Edwards said in a statement.
“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.”
Edwards declined to discuss the matter.
A review of Edwards’ campaign money will turn up a cluster of nonprofits, some not subject to the same rules of transparency as official campaign organizations.
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“This may be a bit like looking for a needle in a haystack,” said Sheila Krumholz, executive director of Open Secrets, a campaign watchdog group. “John Edwards is a leader in misleading the public.”
Campaign finance laws prohibit candidates from spending campaign money to pay for personal expenses they would have incurred had they not been running for office. But nonprofits created to support a candidate or his message have different requirements.
The Alliance for a New America, the group that received Mellon’s millions, was kept at arm’s length from Edwards, a requirement of campaign finance law. Nonprofits such as this, known as 527 groups, primarily finance media messaging that most often closely aligns with a particular candidate’s stance.
The alliance was launched by Nick Baldick, Edwards’ campaign manager in 2004. At least one of the donors, San Francisco attorney Jim Finberg, said he was advised the money would pay for media ads supporting universal health care in Iowa. He knew the group was linked to Edwards; by law, however, Edwards couldn’t be involved in the group’s activities.
The Center for Promise and Opportunity, a nonprofit organization allowed to shield donors’ identity but allowed some political expenditures, paid for much of Edwards’ early groundwork in New Hampshire and Iowa.
The organization’s statement of purpose filed along with its tax disclosures never mention Edwards. Edwards was the center’s honorary chairman, according to media reports in 2006.
“They play this charade. Refrain from saying they are a candidate, so they don’t have to follow the rules,” said Paul S. Ryan of the Campaign Legal Center, a nonpartisan group that monitors campaign finance issues. “They’re gaming the system. If they play carefully enough, they can avoid running afoul of the law.”
In 2006, Edwards traveled the nation, walking picket lines and talking to crowds about poverty and his regret in voting to fund the war in Iraq, travel paid for by the Center for Promise and Opportunity.
The center also paid for Edwards’ trips abroad, where he met with foreign leaders and visited developing nations plagued by squalor. Rielle Hunter was at his side filming.
December 31, 2007
Edwards hit on campaign spending
WASHINGTON – The Obama campaign is challenging John Edwards’ populist message that he is campaigning free from the influence of the powerful forces that control Washington.
Two Edwards-affiliated groups, Alliance for a New America and One America, between them got a total of $750,000 from Rachel “Bunny” Mellon, a 97-year-old socialite who is the widow of Paul Mellon and daughter-in-law of industrialist Andrew Mellon, The Washington Post reported.
Barack Obama’s campaign manager, David Plouffe, said these donations showed Edwards exploited a loophole in the campaign-finance system and accepted public funds while still spending all he needed in Iowa.
Outside 527 ads “like a drive-through operation” – Pay and Go
One ad airing on Iowa television stations warns of “government run by corporate lobbyists,” and promotes “the Edwards plan” as a solution, accompanied by photos of Democratic presidential candidate John Edwards.snip
But Steve Weissman, associate director of the non-partisan Campaign Finance Institute in Washington, D.C., said fines or penalties for any improprieties likely are years away.
“They don’t care if they’re fined,” Weissman said. “By the time that happens, they’ve disappeared. It’s just a cost of doing business.”
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The groups “are spending large sums of unlimited contributions on what they claim are issue ads but what instead are unquestionably campaign ads being run to influence the 2008 presidential election,” Wertheimer said.
The ads getting the most attention in Iowa in recent days are run by a union-financed group called the Alliance for a New America, based in Alexandria, Va., and feature the complimentary images of Edwards. The group is headed by Nick Baldick, a former Edwards adviser, and contributions have come from locals of the Service Employees International Union.
A $495,000 contribution also came from Oak Springs Farm LLC, which the Associated Press reported is the entity that holds the fortune of 97-year-old philanthropist Rachel Mellon. Mellon has also contributed directly to Edwards’ presidential campaign, as has the lawyer who holds power over Oak Springs Farm.
The New York Times reported about an e-mail that seemed to suggest conversations between Edwards campaign officials and the group’s leaders, with Alliance leaders apparently asking the campaign “what specific kinds of support they would like to see from us.”
Edwards aides said nothing improper occurred.
Critics, predominantly Barack Obama’s campaign, have accused Edwards of using supposedly independent groups to support him even while he bashes the power of special interests, and to get around spending limits he accepted in exchange for public campaign money.
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Weissman said that the lack of ability to rein in outside groups is the fault of both the Federal Election Commission and Congress, which has failed to approve legislation restricting 527s. It’s up to Iowa voters to remain wary of ads pitched by groups whose finances or agendas are unclear, Weissman said. “It’s like a drive-through operation,” he said.
Edwards would ban 527s, but happy to take their money
Edwards had raised $30 million by the end of September, significantly trailing rivals Barack Obama and Hillary Rodham Clinton. At that point, the campaign decided to seek public funds.
Under the presidential financing system, candidates get matching funds for every donor’s contribution of up $250. If they accept the money, they must abide by spending limits in each primary and caucus state as well as an overall cap on primary spending. Those restrictions have prompted most of the leading candidates to decide to forgo the public money.
Edwards has so far spent more than $5 million on advertising in Iowa and New Hampshire. He’s also getting help from independent, mostly labor-financed groups that have drawn criticism from watchdog groups and from Obama. The groups, called “527″ organizations for the section of the IRS code that authorizes them, have been running ads supporting Edwards’ policies in Iowa during the closing days of the campaign there.
Edwards, who made his fortune as a trial lawyer with his wealth somewhere between $12.8 million and $60 million, has refused donations from political action committees and lobbyists and has cast himself as the candidate less connected to Washington special interests. But Obama and other critics say the 527 groups are simply special interests helping him in another guise. Though labor groups have supplied much of the financing, one of the donors is a 97-year-old heiress to the Mellon family fortune.
Edwards has offered a finely honed response, saying he opposes the 527 organizations, but is proud of having the support of unions.
“They’re not running any negative, no attack ads. This is just positive advertising,” he said of the groups Sunday on CBS. “But that aside, I think these 527s need to be banned. I didn’t want them running advertising, and I’ve continued to say that every time I’ve been asked. But I can’t stop these people. I don’t have control over them.”
December 30, 2007
Edwards’s populist message in doubt
John Edwards’s populist message has, without a doubt, helped distinguish him from the other Democratic candidates in Iowa.
But a central tenet of that message — that he is campaigning free from the influence of the powerful forces that control Washington — is being challenged in light of the most recent federal election filings by one of the outside groups advocating on his behalf, and has sparked a round of dueling memos by the managers of the Barack Obama and the Edwards campaigns.
As The Washington Post reported Friday, the independent expenditure group Alliance for a New America recently received nearly $500,000 from Rachel “Bunny” Mellon, a 97-year-old socialite who is the widow of Paul Mellon and daughter-in-law of industrialist Andrew Mellon. It is at least the second check that Mellon has written to an Edwards-affiliated entity. The first, for $250,000, came in 2006, to the One America independent group, which helped support Edwards’s political efforts between his presidential bids.
“These latest revelations make it clear why Edwards was able to announce that he could accept public funds while still spending all he needed to spend in Iowa,” wrote Obama campaign manager David Plouffe in memo released Saturday morning. “His campaign simply exploited the biggest loophole in the campaign finance system in order to get public matching funds while arranging through allies to benefit from a 527. That’s how they avoided the spending limits that are a condition of the public matching funds.”
Edwards has new “Gilded Age”
The Gilded Age was a dark period in American politics, John Edwards recalls. Back before Teddy Roosevelt fought for reforms, he told a Nov. 26 town meeting in Bow, a few families wielded disproportionate power.
“The Rockefellers and the Mellons and the Carnegies, all these people, owned most of America or a big chunk of America and they used their money and power to dominate what was happening in the government and to dominate what was happening in the economy,” he said.
Edwards has often invoked Roosevelt on the stump as a hero and railed against the influence of money in politics. But at the same time, it appears that the pro-Edwards movement has had a huge infusion of cash from the old Mellon fortune.
Turns out, the labor-linked, pro-Edwards 527 that’s been running ads in Iowa and spreading pamphlets in New Hampshire has deep-pocketed friends outside of unions.
The single largest donor to the Alliance for a New America, according to new FEC reports, is a mysterious LLC registered to New York City’s high-end Essex House hotel. (We called the room listed as the source of the $495,000 check and got an automated voicemail: “The person in this room is not available to take your call. . .”)
According to reporting elsewhere, the group, Oak Spring Farms LLC, is linked to New York lawyer and Edwards backer Alexander Forger, who holds power of attorney over 97-year-old Rachel Lambert Mellon, the daughter-in-law of industrialist and banker Andrew Mellon.
Mellon and her deceased husband, Paul, had a farm called Oak Spring; property records in Virginia refer to it as Oak Spring Farms LLC.
In 2006, when the New York Sun reported on a $250,000 contribution from Oak Spring Farms LLC to Edwards’s One America Committee, Forger declined to say where the money came from.
“I’m simply acting on behalf of somebody else,” he said then.
Edwards has made a campaign issue out of kicking special interests out of politics and often cites his pledge not to take any money from lobbyists. He’s said he would outlaw 527s if he’s elected.
The Alliance for a New America 527 is advised by Nick Baldick, who managed Edwards’s 2004 campaign.
December 29, 2007
Edwards drops Mellon reference from remarks
Democrat John Edwards insisted Saturday he has not taken any money from special interests as the Obama campaign complained about big spending by outside groups friendly to Edwards.”His campaign simply exploited the biggest loophole in the campaign finance system in order to get public matching funds while arranging through allies to benefit from a 527. That’s how they avoided the spending limits that are a condition of the public matching funds,” Obama campaign manager David Plouffe said in a statement.
Plouffe said the outside spending allows Edwards to stay within the limits required by public financing “while still spending all he needed to spend in Iowa.”
His memo was prompted by disclosure of a $495,000 donation from philanthropist Rachel Mellon to a 527 group called the Alliance for a New America that is running ads in Iowa in support of Edwards’ campaign. The nonprofit 527 groups can legally carry out some political activity but have come under scrutiny by the Federal Election Commission for their advertising during past presidential campaigns.
An FEC report showed the donation came from Oak Spring Farms LLC, the corporate entity that holds Mellon’s fortune. Mellon is the 97-year-old widow of Paul Mellon, the son of industrialist Andrew Mellon.
She also contributed the maximum $4,600 allowed to Edwards’ campaign earlier this year. The lawyer who serves as director of the investment fund, Oak Springs Farm LLC, also has contributed the maximum $4,600 allowed to Edwards’ campaign.
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Just a thought piece – Edwards “only just learned about it”
Obama objected last week to the Alliance for a New America, which is run by Edwards’ former campaign manager and partially funded by local unions affiliated with the Service Employees International Union. The locals have endorsed Edwards.After Obama objected to the group last week, which now is running television ads in the state, Edwards said he had only just learned about it and called for a halt to its activities.
The argument gained new fuel Thursday, however, when a memo from October surfaced that summarized a conference call among the union locals that outlined several steps they planned to take.
Among them was general agreement that a 527 political group would likely be set up. A 527 is a political committee that can raise larger sums of money than typical political committees. The memo also said there were plans “to discuss with the Edwards campaign what specific sort of support they’d like to see from us.”
Coordination between 527 political groups and campaigns is heavily restricted, although some discussions are legal.
On Friday, The New York Times, which first broke the story about the memo, reported that campaign finance watchdogs were raising questions about the legality of the activity.
An official representing the union locals said Friday it has followed the law and it is inaccurate and “reckless” to link the memo to the Alliance’s activities.
“This was just a thought piece sent out by a leader inside of SEIU. It was an internal memo. It specifically said it had to be vetted with our legal team,” said Dave Regan, the president of SEIU District 1199, which is based in Columbus, Ohio, and includes members from Ohio, Kentucky and West Virginia. “Everything that we’ve done absolutely complies with all legal requirements.”
An Edwards spokesman also said there was no wrongdoing.
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Those “Union-Backed” 527s
Our politics will never change until we get control of these 527s which are established to circumvent campaign finance laws. What is wrong with the Mellon’s putting in money? What is wrong is that I am only allowed to put in $2300 and she puts in $750,000 – that’s what.
And for a place which likes to throw around the word naive any chance it gets, it’s somewhat surprising to see the ridiculously naive comments posted here. Oak Spring Farm LLC is not an easy thing to find. It doesn’t have an office and is controlled by one man who is very secretive. The idea that they sent $250,000 to Edwards PAC back in 2006 and then somehow end up aligned with the SEIU Union without some connection back to Edwards is pretty damn naive.
