An indictment could come within days unless the 2004 Democratic vice-presidential nominee reaches an agreement with prosecutors to plead guilty to a negotiated charge, said the person, who spoke on condition of anonymity because of the case's sensitivity.
It was not immediately clear what charges prosecutors planned to bring.
Federal authorities have been investigating the former North Carolina senator's campaign finances, focusing heavily on money from wealthy supporters that allegedly went to keep mistress Rielle Hunter and her out-of-wedlock baby in hiding in 2007 and 2008 to protect Edwards' White House campaign from a career-ending scandal.
Prosecutors, in an investigation overseen by top Justice Department officials in Washington, have been looking at whether those funds should have been reported as campaign contributions since they arguably aided his presidential bid.
Edwards attorney Gregory Craig said in a statement that prosecutors have never found that campaign funds were misused and said the government's theory in the case is without precedent and "wrong on the facts and wrong on the law."
"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 is former White House counsel for President Barack Obama.
The statement did not say whether a deal still could be reached.
Edwards' attorneys have long said they are confident the 57-year-old former politician did not violate campaign finance laws.
The investigation has centered largely on allegations leveled by former Edwards campaign aide Andrew Young, who as the scandal began to unfold in 2007, publicly claimed to be the baby's father to protect his boss' career.
Young has said that two wealthy Edwards supporters supplied the money and the private jet that Young used to hide Hunter from the news media, first in North Carolina, then in Colorado, and finally at a home in California.
George Holding, the U.S. attorney in Raleigh, declined to comment. Holding was appointed by President George W. Bush but has remained on the job because North Carolina's senators asked President Barack Obama to let him finish the Edwards probe.
Hunter had been hired to shoot video of Edwards as he prepared for his White House bid. Their child was born in February 2008, a month after he dropped out of the race.
Edwards initially denied having an affair with Hunter but eventually admitted to it in the summer of 2008. He also denied being the father of her child before finally confessing last year. His wife, Elizabeth, died of cancer in December.
Edwards, who made his millions as a trial lawyer, could lose his law license if he enters a guilty plea.
Young has said that Edwards agreed in 2007 to solicit money directly from Rachel "Bunny" Mellon, the 100-year-old widow of banking heir Paul Mellon. Young has said he received hundreds of thousands of dollars in checks from Mellon for his use and Hunter's, with some of the checks hidden in boxes of chocolate.
Mellon's attorney has said she didn't know where the money was going but intended it as a personal gift.
Investigators also looked at money spent by Edwards' former campaign finance chairman, Fred Baron, who died in 2008. He said he helped Young and Hunter move across the country. Baron said that Edwards wasn't aware of the aid, but Young said in a book that Edwards knew about Baron's money.
Young, Hunter, Baron's wife and a cast of other former Edwards aides and supporters have been called to testify before a federal grand jury or have been interviewed by investigators.
Baker reported from Olympia, Wash. He can be reached at http://twitter.com/MikeBakerAP . Associated Press Writer Nedra Pickler contributed from Washington.