Former Penn State football coach Joe Paterno and board members of Second Mile, Jerry Sandusky's charity, partnered to develop a $125 million housing project, suggesting Paterno had close business ties with the group, reported The Daily.
When initial accusations of Sandusky's child molestation emerged in 2002, Paterno and three investors, including Second Mile chairman Robert Poole, had received $56 million in bonds for construction of a luxury retirement complex. The group, Pinnacle Development, also planned a nearby golf resort, restaurant and hotel.
Poole also runs Poole Anderson Construction, a general contractor also employed by Penn State, which stood to make $3 million from the second phase of the project.
In other ventures, Paterno partnered with Second Mile board members for stakes in a bottled water company, Aqua Penn, a coaching website and retail stores, reported The Daily.
Pinnacle Development was overseen by a nonprofit, led by former Second Mile board member Peter Weiler and former Penn State official Gary Schultz, because the project was to be built on Penn State-owned land.
If successful, each of the four partners was set to make an estimated $590,000 in fees and an additional 15 percent interest on $125,000 investments.
But with entrance fees of around $500,000 for residents, the project failed to rent enough apartments to pay back bondholders and owed $18.8 million to residents who demanded refunds. The nonprofit parent company filed for bankruptcy last Wednesday.
Earlier this year, Paterno transferred ownership of his home to his wife for $1, a move attorneys said could be made to shelter the home from civil suits.
In a 2005 advertisement, Paterno pitched the project to potential residents.
People have asked me many times, why did I stay, and I stayed because I love the town, I love the community and I see how it would be a great place to bring up a family and eventually to retire, he said.