Edwards defense testimony focuses on payments, ex-aide

GREENSBORO, N.C. — Lawyers for John Edwards spent their second day of defense testimony Tuesday trying to discredit the chief witness against him while also seeking to prove that money paid to support Edwards’ mistress constituted private gifts and not illegal campaign contributions.

A former FBI agent hired by Edwards’ lawyers to investigate money spent by the witness, former aide Andrew Young, testified that Young and his wife claimed they had spent money to support the mistress when in fact they spent much of it on themselves. Further, hundreds of thousands of dollars in donations from two key Edwards benefactors — intended for the mistress — were used to build a $1.6-million mansion for the couple, the former agent said.

A confidant of Edwards testified that the Democrat’s 2008 national finance chairman began sending $9,000 a month to the mistress, Rielle Hunter, nearly six months after Edwards quit the presidential race. Edwards’ lawyers argue that any money provided after he ceased to be a candidate cannot be considered campaign contributions.

The testimony came as Edwards’ lead lawyer, Abbe Lowell, said he was considering calling Hunter, who had a child with Edwards, as soon as Wednesday. Lowell also told the court that he may call Young again.

Lowell told U.S. District Judge Catherine Eagles that he would notify the court and prosecutors Tuesday night whether either would testify. He also indicated he would call Edwards’ eldest daughter, lawyer Cate Edwards, to the stand Wednesday to testify on her father’s behalf.

Lowell did not discuss calling the defendant, who was a successful trial lawyer with a reputation for charming juries.

The government alleges that more than $900,000 provided by the two wealthy benefactors to hide and support Hunter during Edwards’ failed 2008 campaign were illegal contributions intended to keep the affair secret — and prevent his campaign from collapsing in scandal.

Edwards’ defense team says the payments were gifts intended to hide the ongoing affair and the couple’s child from Edwards’ wife, Elizabeth, who was dying of cancer. Edwards, 58, is charged with six counts of violating federal campaign finance laws. He faces 30 years in jail and $1.5 million in fines if convicted on all charges.

James Walsh, a 25-year FBI veteran who now specializes in financial records as a private investigator, said he spent months comparing credit card bills and other records against a chart the Youngs made listing “expenses due to affair” or “Rielle expenses.”

The documents showed that some money purportedly spent on Hunter was actually spent by the Youngs on family vacations, restaurants, groceries and other personal items, Walsh testified.

To make personal expenses appear to be payments supporting Hunter, who spent time in Santa Barbara while in hiding, the Youngs listed department store and pharmacy expenses as originating in Santa Barbara, Walsh testified. But the charges were actually made in the Chapel Hill, N.C., area, where the Youngs live, he said.

In all, Walsh said, Andrew and Cheri Young received $1.07 million from Rachel “Bunny” Mellon, a billionaire heiress, and the late Fred Baron, a wealthy Texas lawyer, in 2007 and 2008. The Youngs hid Hunter in their gated home in North Carolina and then flew her around the country to avoid media and public scrutiny.

Walsh said the Youngs filed IRS gift tax reports on the money from Mellon and Baron. Those gift taxes, previously disclosed during the prosecution’s case, support the defense contention that the money was a gift.

Records showed that the Youngs spent at least $191,000 in 2007 and 2008 on Hunter for a $20,000-a-month California rental home, medical bills and stays at a luxury resort, Walsh testified.

Baron, who served as Edwards’ finance chairman and died in October 2008, gave a total of $74,000 to Hunter after Edwards dropped out of the presidential race. Prosecutors have pointed out that Edwards still hoped to be selected as a vice presidential candidate or for a Cabinet post.

John Moylan, who ran Edwards’ campaign in South Carolina, testified that he believed Edwards did not know about the “Bunny money” until Mellon disclosed the payments while Moylan and Edwards were visiting the Mellon estate in Virginia in August 2008.

“He was as surprised to hear it as I was,” Moylan said of Edwards’ reaction to Mellon’s comments.

Moylan testified that Edwards told Mellon: “Bunny, you should not be sending money to anyone.”

Moylan said he and others were concerned that Young “was trying to get money using Mr. Edwards’ name.” After prosecutors objected, the judge ordered the jury to disregard the remark.

But the jury did hear unflattering testimony about Young from another defense witness, Elizabeth Nicholas, who was Edwards’ executive assistant when he was a U.S. senator.

“I found him [Young] to be dishonest,” Nicholas testified. She added later: “He was not known for being truthful.”

Also Tuesday, former Federal Election Commission Chairman Scott Thomas testified that third-party payments used to cover up an affair during a political campaign had never come up during his 30 years with the agency.

On Monday, Thomas told the judge that he believed such payments were gifts and not campaign contributions. But Eagles did not allow Thomas to make that statement in front of the jury.

david.zucchino@latimes.com