In 2000, he was actually almost hired as Head Coach at Virginia. I think somehow Penn State officials put the kibosh on it, possibly by threatening Sandusky. Current Detroit Lions Head Coach, and their Tight Ends coach, who was the Miami Head Coach, had already committed to Sandusky's staff at Virginia.
“Paterno knew”
I don’t think so. Paterno was a straight shooter. As straight as they come. I was a professor at Penn State and I watched him for years. I didn’t like him as a coach as he was too old school and not a strategist, but as far as I am concerned, he would bench his starting quarterback for breaking the rules even if it was a championship game. He was a by the rules great guy.