John Edwards Didn't Know Of Rielle Hunter Payments, Testifies Confidante John Moylan

* Edwards learned of donation in August 2008-friend

* Daughter may testify on Tuesday

By Colleen Jenkins

GREENSBORO, NC, May 15 (Reuters) - Former U.S. Senator John Edwards looked surprised when he learned in 2008 that a wealthy donor had funneled money to an aide, an Edwards confidante testified on Tuesday as his defense sought to refute charges that Edwards had solicited the funds.

Federal prosecutors say Edwards directed the aide, Andrew Young, to seek more than $900,000 in illegal campaign funds from heiress Rachel "Bunny" Mellon and another wealthy donor as part of a plot to keep the politician's extramarital affair hidden during his failed 2008 bid for the Democratic presidential nomination.

Edwards has pleaded not guilty to campaign finance violations.

John Moylan, who worked on Edwards' 2004 and 2008 presidential campaigns, testified he believed his friend did not learn of Mellon's payments until a visit to her Virginia home in August 2008. By then, Edwards had dropped out of the latter race and admitted to an affair on national TV.

"My impression was that we were both learning of that transaction for the first time," Moylan, who had accompanied Edwards on the trip to Mellon's estate, said.

According to Moylan, Edwards told the now 101-year-old woman, "Bunny, you should not be sending money to anyone."

The defense on Tuesday continued its effort to refute the campaign finance charges Edwards, 58, faces as a result of secret payments from Mellon and Texas trial lawyer Fred Baron.

The federal government accuses Edwards of trying to influence the election by soliciting the money, some of which was used to pay for his pregnant mistress' living and medical expenses.

Edwards' attorneys argue he had nothing to do with the payments, which they say were meant as personal gifts intended to keep Edwards' wife, Elizabeth, from finding out about the ongoing affair and Hunter's pregnancy with his child.

DAUGHTER'S TESTIMONY EXPECTED

The defense indicated Edwards' eldest daughter, Cate, may be called to testify on Tuesday. She spent the morning listening to testimony from her typical front-row seat in the courtroom next to Edwards' parents.

Former Federal Election Commission Chairman Scott Thomas testified that third-party payments used to cover personal expenses related to an affair had never come up as a matter of campaign finance law in his 37 years of experience in that field.

The trial judge, however, blocked Thomas from telling jurors his opinion that the money from Mellon and Baron did not qualify as campaign contributions. Whether the money was personal or political in nature is a key factor in the case.

A former FBI agent said bank records showed Baron wired $74,000 to Hunter's bank account from June to December 2008, months after Edwards had ended his campaign. The money was in addition to the thousands Baron spent on Hunter and Andrew Young after the aide falsely claimed paternity of Hunter's child during the campaign.

James Walsh, now a private investigator, also noted how bank records showed that Mellon's checks totaling $725,000 between 2007 and 2008 were deposited into Andrew Young's bank accounts.

Young, the government's chief witness against Edwards, was granted immunity in the case. The defense has portrayed him as a money-hungry liar.

A former staff member in Edwards' U.S. Senate office said Young was known among his colleagues for "kind of misrepresenting things."

"He was not a team player, and I found him to be dishonest," said ex-staffer Elizabeth Nicholas. (Reporting By Colleen Jenkins; Editing by Cynthia Osterman)