Michael McQueary, his other assistant, had reported to Paterno an extreme sexual incident he witnessed in a locker room between Sandusky and a young boy in 2001, according to police report obtained by CNN.
According to the police report cited on Saturday, which was written after Sandusky's arrest 10 years later, Paterno allegedly responded to McQueary by saying this "was the second complaint of this nature he had received".
McQueary's revelations led to Sandusky's conviction in 2012 for sexually abusing 10 boys over 15 years. He is currently serving a 30-year prison sentence.
'I wish I had done more'
The legendary coach JoePa, as his fans knew him, died in January 2012 at the age of 85, shortly after he was fired in November 2011 amid revelations that assistant coach Jerry Sandusky had sexually abused close to a dozen boys on the Penn State campus.
The latest police report casts fresh doubt on denials by Paterno, his family and his supporters that the head coach knew about Sandusky's predatory serial molestation before the 2001 incident.
It contradicts the head coach's testimony before a grand jury and his published statement a week before he passed in 2012 that he "had 'no inkling' that Sandusky might be a sexual deviant", until he heard the shocking news from McQueary in 2001.
However, positive evidence unveiled since Paterno's death suggest the head coach was told of other similar claims as early as the 1970s. "I wish I had done more," was his response when he was fired from his job after 46 years at the helm.
“Success without honor is an unseasonal dish; it will satisfy your hunger but it won’t taste good,” Paterno once said in one of his most famous quotes.