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.