Edwards Used Nonprofit to Funnel Money to Hunter

A nonprofit group that John Edwards set up to fight poverty paid $124,000 for Web videos and photos to the former Democratic presidential candidate's mistress, say four lawyers familiar with the payments. The Center for Promise and Opportunity wrote the previously unreported checks to videographer Rielle Hunter in late 2006, the same year Edwards acknowledged he started a "liaison" with her. (Edwards contended originally that he cut off the relationship that year. He admitted more recently he's the father of Hunter's daughter, born in February 2008.) The checks have since been subpoenaed by federal prosecutors in North Carolina as part of a sprawling criminal investigation into nearly $1.5 million in payments from various Edwards entities and campaign contributors that were for Hunter's benefit, say the lawyers, who asked not to be identified talking about an ongoing probe.

Edwards established the center in 2005 to conduct a variety of public-minded programs, such as "leading a nationwide effort on college campuses to involve young people in the fight against poverty," according to the group's tax returns. The center collected $2.2 million in 2006—more than half, $1.2 million, from a single donor, Bunny Mellon, the 99-year-old heiress to the Mellon fortune, says Alex Forger, Mellon's lawyer (who says his client knew nothing about any payments to Hunter). In the summer of 2006, the center signed a contract with Hunter to document Edwards's work for the group's causes, says Patricia Fiori, a lawyer for the nonprofit. Fiori says the contract was "completely appropriate" and "not based on a personal relationship." Hunter provided "rough footage and photographs," including videos of Edwards taken during a trip to Africa. When asked for examples of how the center used Hunter's work, Fiori told NEWSWEEK, "It would be impossible to have that evidence at this point" because the center is now defunct and its Web site is no longer operational. In any case, she added, "you frequently hire people to write speeches and the speeches are never given."

The payments to Hunter were made at the same time that Edwards's political action committee was separately paying her a similar amount to produce Webisodes promoting Edwards as a political figure. (The Webisodes became a source of controversy within the campaign; some aides thought they were "goofy and unpresidential," says a former top Edwards aide who also asked not to be identified due to the ongoing probe.) But the payments from the tax-exempt center could raise separate issues if federal prosecutors determine that Edwards misused the group's assets, since the rules for such tax-exempt groups are stricter than those for political committees. Jim Cooney, an Edwards lawyer, says: "We strongly believe he didn't violate any campaign-finance laws, and we be-lieve [the political committee] and the center were run in accordance with all applicable laws."