Witnesses point finger at Edwards' aide

Most of the money that federal prosecutors contend was earmarked for John Edwards' pregnant mistress went instead to a former aide of the two-time presidential candidate, a former FBI agent testified Tuesday.

Jim Walsh's testimony capped a day of points scored by the defense in the 17th day of Edwards' criminal trial, but attention shifted late in the day to who might take the witness stand Wednesday.

Defense attorney Abbe Lowell announced as court recessed for the day that Edwards' daughter Cate would testify and that Edwards himself, his mistress, Rielle Hunter, and former aide Andrew Young also might be called as witnesses.

The former U.S. senator is accused of masterminding a scheme to use nearly $1 million in secret payments from Virginia heiress Rachel "Bunny" Mellon and Texas trial lawyer Fred Baron to help hide Hunter as he sought the Democratic presidential nomination in 2008. He faces up to 30 years in prison if convicted on all six charges.

Walsh, who investigated white-collar crime during his 25 years with the FBI, now runs his own business in Charlotte analyzing financial records. Edwards' defense team hired him last August to review Young's bank and credit card statements and Hunter's financial records.

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Young and his wife were bleeding red ink for most of 2006-08, Walsh said, noting the couple spent more than they brought in during 25 of the 36 months. Three of the months they were in the black coincided with checks from Mellon that they deposited in their accounts, he said, while two others were because they deposited the proceeds from selling a house in Raleigh and they got a mortgage to build a house near Chapel Hill.

The Youngs' accounts were $344,000 in the red by the end of 2008, Walsh said, despite the fact that the couple had by then received $725,000 from Mellon and $345,000 from Baron.

Meanwhile, Baron wired $74,000 directly to Hunter's accounts between June and December 2008, Walsh said.

The timing of the deposits, which came months after Edwards had ended his candidacy, support the defense notion that Baron, who was Edwards' campaign finance chairman, was simply helping a friend in need and not making a campaign contribution.

Defense attorney Allison van Laningham also led Walsh through a methodical comparison of what Young claimed to have spent on Hunter and what the couple actually spent for her personal and medical expenses.

Some credit card charges didn't add up, family trips were included in a list of expenses Young had attributed to the affair, and the amounts the Youngs listed on gift tax forms with their annual tax returns were far less than the amounts they reported to Baron and later to prosecutors that they had spent on Hunter, Walsh said.

The defense has argued that Young milked Mellon for money without Edwards' knowledge in order to finance a lavish lifestyle.

Another defense witness Tuesday supported that contention.

John Moylan, a South Carolina political consultant who became close to Edwards while working on his 2004 and 2008 campaigns, said he spent time with Edwards in August 2008 after Edwards had confessed on national television that he had an extramarital affair.

After a few days at the beach, the two men flew to Mellon's 4,000-acre estate, where Mellon mentioned to them that she had been sending checks through her friend to Young.

Young testified earlier that Edwards asked him to pursue the payments as a "long-term solution" to keeping Hunter happy and said that Edwards had assured him and his wife that the payments were legal and weren't campaign contributions.

Moylan said he was surprised to learn of the checks and said of Edwards, "I believe he was as surprised to hear it as I was."

He recalled Edwards telling Mellon, "Bunny, you shouldn't be sending money to anyone."

"I believe to this day that Andrew Young was using Sen. Edwards' name to get money from Mrs. Mellon," he added, prompting an objection from prosecutors because he was stating his opinion.

Moylan said he immediately called Baron to inform him of Mellon's payments. Baron's reaction: "That damn Andrew," Moylan said.

Also Monday, Raleigh lawyer Wade Smith, who once represented Edwards in the case, testified that he never told anyone that Edwards recognized Mellon's payments were to benefit him or his campaign.

Mellon's lawyer, Alex Forger, testified earlier that Smith had told him in late 2008 when he was deciding whether to file a gift tax form for Mellon that Edwards had acknowledged that he had benefited from the money.

"I would never quote my client to someone else," Smith testified, saying that doing so would violate attorney-client privilege.

Smith said he never even discussed Forger's concerns with Edwards and that the question as to whether the checks amounted to a campaign contribution was never raised.

The first defense witness of the day was former Federal Elections Commission Chairman Scott Thomas, who said that an FEC audit of Edwards' 2008 campaign was recently completed and that no mention of Mellon's or Baron's payments was noted in the final report.

Thomas was prepared to testify that he doesn't consider the payments to be campaign contributions, but U.S. District Judge Catherine Eagles disallowed the statement Monday, ruling that it might confuse the jury as to the law and that she would tell jurors at the end of the case how current law reads.