Edwards' nonprofits likely under scrutiny

Edwards on Sunday acknowledged that his campaign finances were under investigation and said that he is cooperating with federal investigators.

"I am confident that no funds from my campaign were used improperly," Edwards said in a statement.

In August 2008, Edwards admitted to conducting an affair with Rielle Hunter, a videographer with his campaign, in 2006. Investigators are trying to determine whether Hunter was paid to keep quiet about the affair.

"You have a man running for president – the highest office of land – and questions are being asked. Was this hush money being paid to cover up an affair?" said Joe Sinsheimer, a former Democratic Party consultant.

Sinsheimer's review of campaign finance records prompted investigations that sent former North Carolina House Speaker Jim Black and former state Rep. Thomas Wright to prison on public corruption and fraud charges, respectively. He said investigators will likely examine the records of Edwards' political-action committee and his nonprofits for any potential wrongdoing.

Edwards' political-action committee, One America, paid Hunter's firm $100,000 for video production in a four-month span in 2006 and then paid an additional $14,086.50 on April 1, 2007. At the time, the PAC only had $7,932.95 in cash on hand, according to records filed with the Federal Election Commission.

Jeannette Hyde, the treasurer for One America, told WRAL News that she didn't pay Hunter or anyone else any money. Hyde said she was named treasurer because Edwards wanted a big Democratic name linked to the PAC, and he told her someone else would handle all of the work.

A former U.S. ambassador to several Caribbean nations and a longtime Democratic fundraiser, Hyde said she has asked Edwards to remove her name from all One America paperwork.

At the same time One America was paying Hunter, Edwards' presidential campaign paid the PAC $14,034.61 for what is listed as a "furniture purchase," according to FEC reports. Four more contributions to the PAC occurred on June 30, 2007, the last day of the reporting period, including a $3,000 contribution from the wife of Edwards' finance chairman, Fred Baron.

Willfully converting money from a political-action committee for personal use is a federal crime.

Edwards also has ties to several nonprofits, including the Center for Promise and Opportunity, which funded some of his early campaign appearances, and Alliance for a New America, a 527 advocacy group.

"If any money came from a nonprofit that went to Rielle Hunter or Andrew Young, there could be serious problems with a violation of the federal tax code," Sinsheimer said.

Young, another Edwards' campaign worker, has claimed to be the father of Hunter's child, Frances, who was born in February 2008. No father is listed on the girl's birth certificate.

Edwards has denied fathering the child, but has offered to take a paternity test. Hunter has refused a paternity test.

Baron, a wealthy Dallas attorney, said last year that he quietly began sending money to Hunter and Young to resettle in California from Chapel Hill. He said no campaign funds were used and that Hunter was not working for the campaign when he started giving her money.

Edwards said he was unaware of the Baron's payments to Hunter. Baron died of cancer in October.

"(Investigators will) probably be looking at the bank accounts of Andrew Young and Rielle Hunter to see if money arrived, and if so, where did it come from," Sinsheimer said.