A source close to the case said Edwards is aware that the government intends to seek an indictment and that the former senator from North Carolina is now considering his limited options.
He could accept a plea bargain with prosecutors or face a potentially costly trial.
Edwards has been the focus of a lengthy federal investigation focusing on hundreds of thousands of dollars allegedly provided by two wealthy supporters. The government will contend those were illegal donations that ultimately went to support and seclude his mistress, Rielle Hunter.
Hunter was a campaign videographer with whom Edwards had a lengthy affair that resulted in a daughter, Frances Quinn Hunter, now three years old.
When the news broke about his affair Edwards vehemently denied it. On Oct 13, 2007 the Associated Press reported that Edwards told reporters,
"The story is false. It's completely untrue, ridiculous."When Edwards was running for President he told us there were "two Americans." And he might have been right because there were two John Edwards. One, was a devoted husband and father, and the other was a lying cheating sleazeball who used campaign money to cover up his own illicit affair.
If the case were to proceed to trial, legal experts said, the government would have to prove that the intent of the donations was to cover-up the affair so that Edwards could continue his pursuit of the 2008 Democratic nomination for president.
The government's case against Edwards is expected to rely heavily on Andrew Young, a former close aide to Edwards who falsely claimed paternity of Hunter's child three weeks before the Iowa caucuses.
Young testified before a grand jury for nine hours in 2009, and also wrote a tell-all book that alleged Edwards was the mastermind of a well-funded, well-orchestrated plan to keep the affair from becoming public.
Edwards acknowledged paternity of the child last year, but has steadfastly maintained that he has broken no laws.
President Barack Hussein Obama, D-Kenya, a long time friend and political ally of John Edwards' was asked on his European vacation about the possible indictment.
President Obama refused comment, saying that this is a matter for the courts to decide. The President was clearly unwilling to criticize his close friend John Edwards.
Clinton said "I just don't understand how a man can do this to his wife and children. As far as I am concerned, Edwards should be sent to prison for betraying his wife."