Sources: Edwards plea deal fell apart right before indictment

Edwards, 58, pleaded not guilty Friday to four counts of illegal campaign contributions and charges of conspiracy and false statements.

Federal prosecutors say he used more than $900,000 from his presidential campaign to cover up his affair with staffer Rielle Hunter and the birth of their daughter, Quinn. Edwards' lawyers say the money from his former campaign finance chairman Fred Baron and Rachel "Bunny" Mellon, a 100-year-old heiress to pharmaceutical and banking fortunes, were personal gifts.

Sources told WRAL News that the U.S. Department of Justice offered Edwards a deal late last week that would have allowed him to plead guilty to three misdemeanor charges and face up to six months in jail. A judge would have decided whether he would serve jail time.

Sources said that defense attorneys wanted to argue before a judge how any possible time might be served, possibly in a halfway house or house arrest. Prosecutors did not want to give defense attorneys that privilege.

Negotiations continued through Thursday night and into Friday morning but fell apart.

Edwards maintained his innocence Friday.

"I did not break the law, and I never, ever thought I was breaking the law," he said.

David McLennan, a political science professor at Peace College in Raleigh, said that statement was intended to send a clear message.

"The federal case is not open and shut. It's going to be based on a lot of interpretation on where or not Edwards' campaign was going forward because of the contributions," McLennan said. 

He said the trial, which starts July 11, will present a "new kind of case."

"(Edwards) is going to roll the dice and see what happens. He's a good attorney. His attorneys are good attorneys," McLennan said.

But the outcome could impact future campaigns, he said.

"It is going to effect how future candidates are going to look at their own campaigns and how outside groups and federal elections officials look at campaigns," McLennan said.

The Justice Department had previously offered Edwards a plea deal for one felony count, sources told WRAL News. A judge would have decided on any possible prison time.

A felony conviction would require him to give up his license to practice.

George Holding, U.S. attorney for the middle district of North Carolina, investigated the case, but it had to be vetted by the Justice Department before charges could be filed. 

If convicted on all counts, he faces a maximum of 30 years in prison and $1.5 million in fines.