There is nothing that "directly" points to the fact that Paterno knew anything, however, with the power that he had at that school, there is no way that something went on without his knowledge (direct or indirect). Until that smoking gun comes out, it is all hear say.
But -- where there is smoke.......
Sandusky victim: Joe Paterno told me to drop abuse accusation
http://www.cnn.com/2016/05/06/us/je...penn-state0957PMStoryGalPhoto&linkId=24234146
Child told Paterno of sex abuse in 1976, court papers allege
http://www.pennlive.com/news/2016/05/court_filing_says_joe_paterno.html
Paterno's Grand Jury Testimony:
Q: Without getting into any graphic detail, what did Mr. McQueary tell you he had seen and where?
Mr. Paterno: Well, he had seen a person, an older — not an older, but a mature person who was fondling, whatever you might call it — I’m not sure what the term would be — a young boy.
Q: Did he identify who that older person was?
Mr. Paterno: Yes, a man by the name of Jerry Sandusky who had been one of our coaches, was not at the time.
Q: You’re saying that at the time this incident was reported to you, Sandusky was no longer a coach?
Mr. Paterno: No, he had retired voluntarily. I’m not sure exactly the year, but I think it was either ‘98 or ‘99.
Q: I think you used the term fondling. Is that the term that you used?
Mr. Paterno: Well, I don’t know what you would call it. Obviously, he was doing something with the youngster.
It was a sexual nature. I’m not sure exactly what it was.
I didn’t push Mike to describe exactly what it was because he was very upset. Obviously, I was in a little bit of a dilemma since Mr. Sandusky was not working for me anymore.
So I told — I didn’t go any further than that except I knew Mike was upset and I knew some kind of inappropriate action was being taken by Jerry Sandusky with a youngster.
Right now he is fleeing bo's pitchfork....