Nov. 10 (Bloomberg) -- After being told at least twice that its founder may have engaged in questionable behavior with boys, a child-welfare organization kept the former Penn State assistant football coach on its payroll and expanded its fundraising and services to needy children, according to a grand-jury report and the group’s tax filings.
Jerry Sandusky, who as a former assistant to Penn State coach Joe Paterno formed the foundation called The Second Mile in 1977, used its events to meet young boys he later sexually abused, according to a grand-jury report released Nov. 5 by the Pennsylvania Attorney General’s office.
The report raises questions about the response of officials at both Penn State and the foundation to allegations that Sandusky engaged in questionable contact with children.
“It was within The Second Mile program that Sandusky found his victims,” the grand-jury report said. Sandusky, 67, was charged Nov. 5 with sexual assault of eight boys from 1994 to 2009. He has denied the charges. Paterno and university President Graham Spanier were fired last night after a meeting of the university’s board of trustees.
The Second Mile serves children with physical, emotional and academic needs and is “committed to helping young people achieve their potential as individuals and as community members,” according to its website. The foundation’s chief executive officer, John Raykovitz, wasn’t available for comment, spokeswoman Jamie Modge said. Modge referred a reporter to a statement on the website.
Contact With Boys
The grand-jury report says foundation officials became aware of contact between Sandusky and boys in Penn State’s football showers in 1998 and again in 2002. The Second Mile’s assets more than tripled from 2002 through 2009, according to Internal Revenue Service filings. Sandusky was its “primary fundraiser,” the grand-jury report said.
“The grand jury also noted that the 1998 report involving Sandusky and boys in the showers was reviewed by university police and Child Protective Services, with the blessing of Wendell Courtney, who at the time served as university counsel and was (and remains) counsel to The Second Mile -- though no criminal charges were ever pursued,” Attorney General Linda Kelly and State Police Commissioner Frank Noonan said in a statement.
Courtney, now an attorney in private practice, didn’t respond to a telephone call requesting comment.
In March 2002, Penn State personnel told Raykovitz that an athletic assistant had seen Sandusky engage in inappropriate conduct with a boy in the shower at the football team’s headquarters, the grand-jury report said.
The foundation’s statement on its website said university officials told Raykovitz that someone reported being “uncomfortable about seeing Jerry Sandusky in the locker room shower with a youth” and that the foundation was not made aware “of the very serious allegations contained in the grand jury report” -- that Sandusky was engaged in sexual activity with the boy.
Two university officials, Timothy Mark Curley, 57, the director of athletics, and Gary Charles Schultz, 62, senior vice president for finance and business, are each charged with perjury and failure to report the abuse allegations. Attorneys for both men said they are innocent.
Curley and Schultz denied they were told that Sandusky was molesting the boy in the 2002 incident. The grand jury said their testimony contradicted the evidence.
A spokesman for the attorney general declined to say whether The Second Mile was under investigation.
“We would not discuss potential targets,” said Nils Frederiksen. “This remains an active investigation.”
The probe of Sandusky began in 2009, under Attorney General Tom Corbett, who is now governor, and by the state police. Then- Centre County District Attorney Michael Madeira referred a claim from a boy that he was sexually assaulted while a guest at Sandusky’s home in the county’s College Township, according to Kelly. The investigation is continuing. Corbett said yesterday he expects more victims to come forward.
Sandusky remained on the foundation’s payroll as a consultant at $57,000 a year from at least 2001 until 2007, and was also listed as a board member most of those years, according to IRS filings. He retired from the foundation in 2010.
In the statement on its website, The Second Mile said Sandusky told the group in November 2008 that he had learned he was being investigated because of “allegations made against him by an adolescent male in Clinton County,” Pennsylvania.
At that point, the statement said, the group “made the decision to separate him from all of our program activities involving children.”
The foundation’s 2006 Form 990, which is filed by tax- exempt organizations, breaks out his compensation in separate amounts for “program services,” “management and general” and “fundraising.”
The foundation reported assets of $2.7 million on its 2002 IRS Form 990. Assets rose steadily over the next seven years and peaked at $9.55 million on the group’s 2009 filing.
Assets fell to $9.45 million in 2010 and the foundation had a $228,000 loss in net cash flow for operations, according to The Second Mile’s 2010 annual report.
That prompted an appeal from Raykovitz and Bob Poole, the foundation’s board chairman, who urged potential donors to remember that the “children we serve have often experienced broken promises in their young lives; that’s why our mantra has always been, ‘No broken promises, ever.’ We need to continue to be the family they can count on.”
Poole, the CEO of a pair of construction companies, did not return phone messages left at his businesses.
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