In Joe Paterno's latest interview with the Washington Post, he said he knew nothing about Jerry Sandusky being investigated in 1998 by local police.
This article from Sports by Brooks shows newspaper articles from this time period which not only indicate Sandusky's support, but also Paterno's, for a new football program at PSU Altoona. This was pitched after the investigation into Victim 4's time with Sandusky, the infamous victim of the shower incident, but before Sandusky retired. As a refresher, during this investigation was when Sandusky said that that his behavior “was wrong” and that “I wish I were dead.” Ultimately, the new program never came to fruition.
This gives support to the notion that Joe Paterno did, in fact, know about Sandusky being investigated in 1998. Coupled with evidence of the conversation Paterno had with Sandusky in which he informed him that he would not become Penn State's next head football coach (which occured in 1999) , it appears that the two came up with a backup plan: Sandusky would start a new football program at PSU Altoona.
This information seems to indicate that Paterno's role is larger than we were led to believe.