John Edwards Will Face Criminal Charges

[Fern]

Two points: (a) you are assuming it IS illegal behavior. As I tried to raise early on there is a significant legal issue as to whether these funds were legally campaign contributions. If the government gets around that hurdle Edwards better pack up his toothbrush (maybe). Edwards (I assume) will be arguing that this money was a gift from a friend to bail him out of a jam and was never intended by the donor or donee to be a campaign contribution.
-snip-

Donor is quite wealthy and no doubt has all types of attorneys and experts on their payroll, particularly for estate/gift tax (always a big concern for the uber wealthy).

So it's a simple question - did the donor declare the payment to Edwards that year as a gift on their gift tax return or not?

I'm betting not.

Fern

 

[Fern]

If Edwards is convicted he would almost certainly be disbarred by whatever jurisdictions he is licensed in. That's a matter of the lawyer's code of ethics and bar rules-not part of the sentence the trial judge imposes.

In fact he could be disbarred without ever even be convicted.

That's correct.

A local attorney was just dis-barred for stealing client money but hasn't even been indicted yet as they are still auditing records to see how bad it is and what to charge him with.

Fern

 

[werepossum]

Donor is quite wealthy and no doubt has all types of attorneys and experts on their payroll, particlularly for estate/gift tax (always a big concern for the uber wealthy).

So it's a simple question - did the donor declare the payment to Edwards that year as a gift on their gift tax return?

I'm betting not.

Fern

Other question would be whether Edwards laundered it through his campaign account or whether HE reported it as gift income and actually paid taxes on it.

 

[Fern]

Other question would be whether Edwards laundered it through his campaign account or whether HE reported it as gift income and actually paid taxes on it.

I'd guess he's big-time screwed if he laundered it through his campaign account.

If it was a gift, he wouldn't have to report it or pay taxes on it. In the USA, gifts and bequests are not reported or taxable to the beneficiary. It's all on the donor.

If he can't claim it as a gift (not reported as such by the donor) or campaign contribution, then it would be taxable income under tax law. If so, he'd have to report it and pay income taxes. If he didn't, they could charge him with tax fraud. Depending on how he routed the money the money around it would be either civil tax fraud or criminal tax fraud.

I don't have enough details to to guess. other than the donor didn't report it as a gift on their return for that year.

But I have a question - aren't there some low limits on campaign contributions to candidates, something like $2,400? I thought the wealthy donor gave him huge amounts? If so, how could he hope this would be OK once discovered?

Fern

 

[fire400]

well, probably liberal media blowing up stupid crap to fight their own people and letting the right side make stuff up to win re-elections.

 

[Jhhnn]

So it's a simple question - did the donor declare the payment to Edwards that year as a gift on their gift tax return or not?

Not really. It turns into a he said/ she said, and a civil tax liability issue rather than a criminal matter.

Edwards- "she said it was a gift, so I assumed the taxes were paid."

Govt- "They weren't."

At which point either the gift giver or receiver can say- "Sorry, I screwed up. How much do I owe you?"

 

[lothar]

I'd guess he's big-time screwed if he laundered it through his campaign account.

If it was a gift, he wouldn't have to report it or pay taxes on it. In the USA, gifts and bequests are not reported or taxable to the beneficiary. It's all on the donor.

If he can't claim it as a gift (not reported as such by the donor) or campaign contribution, then it would be taxable income under tax law. If so, he'd have to report it and pay income taxes. If he didn't, they could charge him with tax fraud. Depending on how he routed the money the money around it would be either civil tax fraud or criminal tax fraud.

I don't have enough details to to guess. other than the donor didn't report it as a gift on their return for that year.

But I have a question - aren't there some low limits on campaign contributions to candidates, something like $2,400? I thought the wealthy donor gave him huge amounts? If so, how could he hope this would be OK once discovered?

Fern

So basically all Edwards or his donor(err...gifter) has to do is file the 1040X(or whatever tax form it is to restate/pay back owed taxes) and they finish squeaky clean?

Case solved?

 

[ProfJohn]

Here are the details:
Seems like he is screwed.

If he can take a 'gift' and use it for campaign uses then campaign funding laws are meaningless. Rich donors could 'gift' millions of dollars to friends who could then self found their elections

Prosecutors have spent two years investigating whether money from political backers, including Mellon, used to cover up his affair and out-of-wedlock daughter should have been reported as campaign contributions since they arguably aided his presidential bid.

http://news.yahoo.com/s/ap/20110527...uYXRlX3N1bW1hcnlfbGlzdARzbGsDZWR3YXJkc21lZXRz

 

[lothar]

Here are the details:
Seems like he is screwed.

If he can take a 'gift' and use it for campaign uses then campaign funding laws are meaningless. Rich donors could 'gift' millions of dollars to friends who could then self found their elections


http://news.yahoo.com/s/ap/20110527...uYXRlX3N1bW1hcnlfbGlzdARzbGsDZWR3YXJkc21lZXRz

Good point.

 

[Fern]

From the indictment we now have some details:

But the centerpiece of the investigation has long been the hundreds of thousands of dollars privately provided by two wealthy Edwards supporters — his former campaign finance chairman Fred Baron and Rachel "Bunny" Mellon, the 100-year-old widow of banking heir Paul Mellon. That money eventually went to keep mistress Rielle Hunter and her out-of-wedlock baby in hiding in 2007 and 2008, during the apex of the Democratic nomination campaign.

The indictment refers to $725,000 in payments made by Mellon and another $200,000 made by Baron. It said the money was used to pay for Hunter's living and medical expenses and for chartered airfare, luxury hotels and rental for a house in Santa Barbara, California, to keep her hidden from the public.

It accused Edwards of lying when he told the media he never knew about any payments.

Former campaign staffer Andrew Young, who initially claimed paternity of Hunter's child, has said Edwards was aware of the private financial support that helped keep the mistress satisfied and secluded. Prosecutors believe the private gifts should have been considered campaign contributions since they aided his candidacy.

The case opens a new front in how the federal government oversees the flow of money around political campaigns. An attorney for Edwards said last week that the government's case was "novel and untested" and argued that the government's theory was wrong on both the facts and the law.

The money is far in excess of that allowed for campaign contributions.

The money never went through his campaign. It looks to have gone from the donors (directly?) to the mistress.

In spite of this being a rather novel case, I think the governement's case is pretty strong. I think this will hinge on the donors' intent, and there are only limited options:

1. They were making a gift to the mistress because they 'liked her'. Nope, they're not gonna be able to make that case.

2. They were paying her for some service, it's taxable income. Again, nope.

3. It was a gift to Edwards, because they like him and he needed the money. Not very likely, he's got tons of money; but he can't use his for fear of it becoming known.

4. Their basic intent was to help him in his bid to become President. IMO, the most likely, and therefore these gifts should be seen as campaign contributions.

If campaign contribution laws are so easily skirted we're in for a lot of trouble. Essentially his lawyers are suggesting people can make huge gifts directly to a candidate, but just not their campaigns. One obvious problem with this is that candidates can use unlimited amounts of their funds on their own campaign. If it's OK to give directly to a candidate what good will campaign laws limiting contributions be?

Fern

 

[waggy]

fuck him. he is a piece of trash for what he did to his wife.

 

[the DRIZZLE]

I knew he was a sleezeball when that video of him brushing his hair for 10 minutes came out in 2004. You can't trust a man who is that concerned with his hair.

 

[werepossum]

From the indictment we now have some details:



The money is far in excess of that allowed for campaign contributions.

The money never went through his campaign. It looks to have gone from the donors (directly?) to the mistress.

In spite of this being a rather novel case, I think the governement's case is pretty strong. I think this will hinge on the donors' intent, and there are only limited options:

1. They were making a gift to the mistress because they 'liked her'. Nope, they're not gonna be able to make that case.

2. They were paying her for some service, it's taxable income. Again, nope.

3. It was a gift to Edwards, because they like him and he needed the money. Not very likely, he's got tons of money; but he can't use his for fear of it becoming known.

4. Their basic intent was to help him in his bid to become President. IMO, the most likely, and therefore these gifts should be seen as campaign contributions.

If campaign contribution laws are so easily skirted we're in for a lot of trouble. Essentially his lawyers are suggesting people can make huge gifts directly to a candidate, but just not their campaigns. One obvious problem with this is that candidates can use unlimited amounts of their funds on their own campaign. If it's OK to give directly to a candidate what good will campaign laws limiting contributions be?

Fern

$925,000 in living expenses for roughly a year? Was she living on the fucking moon?

I'm not so sure that this case is strong. If the money was never actually handled by Edwards, then the tie would have to be that it helped his campaign and was intended to do so. That can be said about every endorsement and fluff piece as well. Ditto for setting up something like Media Matters, which in its early days specialized in defending Hillary and damaging her critics. Is that then a campaign donation?

Personally I'm not really comfortable with this notion that Edwards is legally guilty if a third party gave money to his mistress and her intent was to help Edwards. Seems to me you also need to prove collusion on Edwards' part. Otherwise his defense would be as simple as "I have no control over what Mellon chooses to do with her money. True, I benefited from her paying off my insane baby momma. However, I had no control over it either way. If someone develops a really top notch hair care product to maintain poofiness over a long campaign day, I benefit from it, but it's not a campaign contribution." Don't get me wrong, I think the guy is a sociopathic waste of skin and I totally support the grand jury indicting him, if only to make sure everyone knows and remembers just what scum he is. I just don't agree that it's a strong case given what we know so far.

 

[Fern]

I knew he was a sleezeball when that video of him brushing his hair for 10 minutes came out in 2004. You can't trust a man who is that concerned with his hair.

Edwards is from my state.

When he first ran for the Senate a video came out showing Edwards in court eliciting testimony from one his clients in the witness chair. Edwards was all smiley and looking like a good boy being all sincere etc.

We then see him back in chamber with his client. He looks like a demon possessed a$$hole screaming at the guy to lie better or they won't win any money.

The 'two-facedness' of this guy is amazing, and scary. It made the hair on the back of my neck literally stand up. It's like he was schizo.

Somehow this video has never been seen since.

Fern

 

[werepossum]

Edwards is from my state.

When he first ran for the Senate a video came out showing Edwards in court eliciting testimony from one his clients in the witness chair. Edwards was all smiley and looking like a good boy being all sincere etc.

We then see him back in chamber with his client. He looks like a demon possessed a$$hole screaming at the guy to lie better or they won't win any money.

The 'two-facedness' of this guy is amazing, and scary. It made the hair on the back of my neck literally stand up. It's like he was schizo.

Somehow this video has never been seen since.

Fern

He may well be schizo. He's definitely sociopathic, and he's got balls the size of mountains when it comes to his own profit. This guy incorporated his law firm, raked in huge profits, paid himself in dividends to dodge SS/Medicare/Medicaid taxes AND pay the lower capital gains rate, then had the audacity to run a Presidential campaign based pretty much solely on his claims that the rich "aren't paying their fair share".

 

[spidey07]

After reading more about the indictment I see this as a non-issue and no crime committed. Those weren't "campaign contributions", it was a payoff and as such nothing to do with the campaign. non-issue.

 

[the DRIZZLE]

He may well be schizo. He's definitely sociopathic, and he's got balls the size of mountains when it comes to his own profit. This guy incorporated his law firm, raked in huge profits, paid himself in dividends to dodge SS/Medicare/Medicaid taxes AND pay the lower capital gains rate, then had the audacity to run a Presidential campaign based pretty much solely on his claims that the rich "aren't paying their fair share".

To be fair, many professionals use the subchapter s structure and distributions from a subchapter s corporation are taxed as ordinary income, not capital gains.

 

[werepossum]

To be fair, many professionals use the subchapter s structure and distributions from a subchapter s corporation are taxed as ordinary income, not capital gains.

Maybe he just dodged SS/Medicare/Medicaid taxes, although I specifically remember him being taxed at the lower capital gains rate. But it's certainly possible I remember it wrong. The strong feeling of disgust lingers much longer than the details, unfortunately.

EDIT: I may be thinking of this, where he worked as a hedge fund manager for a Cayman Islands-based corporation that owned a subprime mortgage company just before he left to campaign against hedge funds, off-shore tax shelters, and subprime mortgage companies.
http://articles.moneycentral.msn.com/Investing/MutualFunds/EdwardsMakingHisMillionsGrow.aspx

Edwards generated most of his wealth as a trial lawyer, but last year his principal employment was as a senior adviser to Fortress Investment (FIG, news, msgs), a large hedge-fund operator, for which he received $479,512. His and his wife's investment in Fortress Investment Fund III (Fund D) totaled between $1 million and $5 million.

Fortress, based in New York, owns subprime lender Nationstar Mortgage, formerly Centex Home Equity. The Dallas company calls itself "one of the nation's leading mortgage lenders offering nonprime mortgages and home-equity loans."

As a presidential candidate, Edwards has lashed out at subprime lenders, saying they are "pulling a fast one on hardworking homeowners."

Talk back: Will candidates' personal and campaign finances affect your vote?

Fortress Investment Fund III is based in the Cayman Islands. Edwards' campaign said he opposes offshore tax havens and, "as president, he will end them."

Edwards has said he worked for Fortress to learn more about financial markets and their link to poverty. He is the former director of the Center on Poverty, Work and Opportunity at the University of North Carolina in Chapel Hill.

He evidently learned a good deal because his portfolio is aggressive and slanted toward Wall Street's most complex deals. He has accounts, including a trust for his children, with Atlantic Trust Private Wealth Management and Oak Hill Capital Partners Fund. Two investments, Drawbridge Global Macro Fund and Drawbridge Special Opportunities Fund, are Fortress hedge funds that specialize in what his disclosure form characterizes as "global markets, strategies and instruments."

When a politician is THAT scuzzy, it's hard to keep the details straight.

 

[Thump553]

I was watching NBC News tonight and they reported that settlement talks broke down just prior to the indictment, supposedly because they couldn't reach an agreement on the length of the prison term.

If true then it's clear Edwards is putting on a braver front than he actually believes. I wouldn't be so quick to assume that rumor is true, however. In high profile cases the prosecutor's side is prone to leak such false rumors to influence public opinion (and future jurors).

It's going to boil down what evidence the government has that these funds were campaign contributions. One of the two donors is already dead, so no testimony there. Edwards behavior was reprehensible but it remains to be seen if it fits all the elements of this crime.

 

[werepossum]

I was watching NBC News tonight and they reported that settlement talks broke down just prior to the indictment, supposedly because they couldn't reach an agreement on the length of the prison term.

If true then it's clear Edwards is putting on a braver front than he actually believes. I wouldn't be so quick to assume that rumor is true, however. In high profile cases the prosecutor's side is prone to leak such false rumors to influence public opinion (and future jurors).

It's going to boil down what evidence the government has that these funds were campaign contributions. One of the two donors is already dead, so no testimony there. Edwards behavior was reprehensible but it remains to be seen if it fits all the elements of this crime.

Sounds about right. I think the prosecutor might have an easier case against the mistress, assuming she didn't pay gift tax, than against Edwards. Of course, I'm assuming they don't have corroborating evidence implicating him in this.

If they can honestly convict him of something I'll be happy, but I REALLY don't want to see some sort of murky new precedent set about what the state may assume about the intentions of someone paying off a mistress.

 

[the DRIZZLE]

Maybe he just dodged SS/Medicare/Medicaid taxes, although I specifically remember him being taxed at the lower capital gains rate. But it's certainly possible I remember it wrong. The strong feeling of disgust lingers much longer than the details, unfortunately.

EDIT: I may be thinking of this, where he worked as a hedge fund manager for a Cayman Islands-based corporation that owned a subprime mortgage company just before he left to campaign against hedge funds, off-shore tax shelters, and subprime mortgage companies.
http://articles.moneycentral.msn.com/Investing/MutualFunds/EdwardsMakingHisMillionsGrow.aspx

When a politician is THAT scuzzy, it's hard to keep the details straight.

The thing that always bothered me about Edwards is that he pretended he wasn't one of the rich guys. There's nothing wrong with being a limousine liberal, you can be wealthy and still be concerned about the distribution of wealth. But Edwards would have you believe that he was a regular Joe six pack when.