TODAY   |  September 23, 2009

Did Edwards’ camp misuse funds?

Sept. 23: A federal grand jury in North Carolina is investigating whether tens of thousands of dollars in campaign donations were used to help the ex-senator’s former mistress. NBC’s Lisa Myers reports.

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MEREDITH VIEIRA, co-host: And now to the potential legal trouble for former senator and presidential candidate John Edwards following his admitted affair with a formain -- former campaign worker, and it comes just days after a New York Times report that Edwards may be ready to admit that he is the father of the woman's 19-month-old daughter. NBC 's senior investigative correspondent Lisa Myers has the latest. Good morning to you, Lisa .

LISA MYERS reporting: Good morning, Meredith . A federal grand jury in North Carolina is now investigating whether tens of thousands of dollars in payments by Edwards ' campaign donors used to help his former mistress were hush money , whether Edwards knew and whether any of it was a crime. What was once merely a sordid tale of a politician's infidelity and serial untruthfulness now is playing out inside this North Carolina courthouse with potentially serious legal consequences. Rielle Hunter , a campaign videographer with whom Edwards now admits having an affair, brought her 19-month-old daughter when she testified before the grand jury last month. How much legal trouble might Edwards be in? Steven Salzberg is a former federal prosecutor .

Mr. STEVEN SALZBERG: I think he's in substantial trouble, because I think the hush money looks bad, smells bad, and the grand jury seems to be serious.

MYERS: At issue, was the $114,000 paid by Edwards ' campaign to Hunter for legitimate work, or was some of it to keep her quiet? Also at issue, was money from two big campaign donors which was used to move Hunter , pay her rent and pay other costs actually hush money ? Prosecutors are considering what would be a novel legal theory , that money to keep an affair quiet and maintain Edwards ' viability as a candidate amounted to campaign contributions which Edwards should have reported. One former prosecutor thinks it's a stretch.

Mr. STAN BRAND (Washington, DC, Attorney): As far as a criminal case goes, I consider it pretty far-fetched.

MYERS: Edwards has denied any knowledge of the payments.

Mr. JOHN EDWARDS: I know absolutely nothing about this.

MYERS: Edwards also first denied the affair.

Mr. EDWARDS: The story's false. It's completely untrue. It's ridiculous.

MYERS: Then admitted the affair, but denied he fathered the child.

Mr. EDWARDS: I know that it's not possible that this child could be mine.

MYERS: Now those close to him say he's considering declaring that he is the child's father. Back in May, his wife, Elizabeth , who is battling breast cancer , was asked by Matt about the possibility Edwards is the father.

Ms. ELIZABETH EDWARDS: I wish for it to never be an issue. But if it becomes an issue, it -- that's just another thing to deal with. But it's not -- that's not like a further betrayal that I'd need to deal with.

MYERS: Neither Edwards ' lawyer nor his spokesman returned calls about the grand jury proceedings. Edwards has denied wrongdoing and says all campaign