John Edwards Denies Breaking Law As Possible Indictment Looms

WASHINGTON (Reuters) - Former presidential candidate John Edwards, under criminal investigation for alleged campaign finance law violations to hide an extramarital affair, did not break the law, his attorney said on Wednesday.

"The government's theory is wrong on the facts and wrong on the law. It is novel and untested. There is no civil or criminal precedent for such a prosecution," Gregory Craig, an attorney for Edwards, said.

Edwards, 57, a former U.S. senator from North Carolina and a Democratic presidential candidate in 2004 and 2008, has been under investigation for more than two years, legal sources said. He could face criminal charges as early as next week.

Much of the investigation centered on whether Edwards illegally spent campaign contributions to hide his affair with one-time campaign videographer Rielle Hunter and whether more than $1 million from supporters to keep her hidden amounted to illegal campaign contributions, they said.

Edwards eventually admitted the affair and that he fathered a child with Hunter.

"John Edwards has done wrong in his life -- and he knows it better than anyone, but he did not break the law. " said Craig, who now is in private law practice after serving as White House counsel for President Barack Obama.

"The government originally investigated allegations that Senator Edwards' campaign's funds were misused but continued its pursuit even after finding that not one penny from the Edwards campaign was involved," Craig said in a statement.

"The Justice Department has wasted millions of dollars and thousands of hours on a matter more appropriately a topic for the Federal Election Commission to consider, not a criminal court," Craig said.

A spokeswoman for U.S. Attorney George Holding in Raleigh, North Carolina, and a U.S. Justice Department spokeswoman in Washington, D.C., declined comment.

The investigation has involved federal prosecutors in Raleigh, along with the Justice Department's public integrity section. Any case would be brought in federal court in North Carolina.

Edwards had been a rising star in the Democratic Party in 2004, when Massachusetts Senator John Kerry selected him as his vice presidential running mate. Kerry lost to Republican incumbent George W. Bush.

Edwards' political fortunes changed after the National Enquirer tabloid newspaper began reporting on his affair with Hunter as he sought the 2008 presidential nomination.

Edwards initially dismissed the reports as "tabloid trash," but eventually admitted the affair after he dropped out of the race.

In January last year, Edwards admitted he had fathered a child with Hunter. Around the same time, he separated from his wife, Elizabeth, after 32 years of marriage. She died from breast cancer in December.

(Editing by Cynthia Osterman)

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