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Penn State pays legal bills for accused ex-officials, but not McQueary

While Penn State continues to pay the legal expenses of former university officials Gary Shultz and Tim Curley, it is not footing the bills for a key witness against Jerry Sandusky at his child sex abuse trial, Mike McQueary, NBC News has learned.

Schultz, a former senior vice president at Penn State, and Curley, the former athletic coordinator, are accused of lying to a grand jury about what they knew of sex abuse allegations against Sandusky. Their case faced its first test in court on Thursday, when defense lawyers argued that the charges should be dismissed.

“In my mind when I did speak with Mr. Schultz he was like a district attorney for the university,” McQueary said in court.

But both men told a grand jury investigating the charges against Sandusky that McQueary described witnessing suspicious activity, not an actual sexual assault. Sandusky was convicted in July of 45 charges of child sex abuse.

A Penn State spokesman cited university bylaws in explaining why the legal bills of both Curley and Schultz are being covered. “(Employees)shall be entitled as of right to be indemnified by the University against expenses (including counsel fees) and any liability (including judgments, fines, penalties, excise taxes and amounts paid in settlement),” they read.

But Penn State is not obligated to pay legal fees for McQueary, and has not done so, the spokesman said. 

McQueary has testified that he felt he carried out his obligation to report the crime when he spoke to Paterno, Schultz and Curley shortly after witnessing the 2001 incident.

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McQueary and a former university janitor, Ronald Petrosky, were the only two Penn State University employees to testify against Sandusky during the trial.

Meantime, in the first hearing on the case against Curley and Schultz since December, attorneys for the former Penn State University administrators appeared in court in Harrisburg, Pa., on Thursday to argue legal points, including a motion to dismiss the charges. 

Dauphin County Judge Todd Hoover did not immediately indicate when he would rule on the motion.

While Curley still collects a salary from Penn State, and Schultz collects retirement money, paid through a state retirement fund, McQueary’s annual “season-to-season” contract with Penn State for his assistant coaching duties was allowed to expire at the end of June, according to university President Rodney Erickson. He is now unemployed.

Erickson confirmed that McQueary was no longer an employee of Penn State during a press conference on July 12, when former FBI Director Louis Freeh published a report that found Penn State administrators, including Paterno and former university President Graham Spanier, covered up abuse allegations against Sandusky.

"McQueary was under a fixed contract,” Erickson said at the press conference. “That contract ended on June 30, 2012. So this contract simply ended at that point.”

No university official had commented on McQueary’s employment status since November, when the university announced that he was “on leave” from the football program.

McQueary’s attorneys have indicated they will file a lawsuit against the University. Penn State declined to comment when asked if the university was in settlement talks with McQueary. A source familiar with the legal maneuverings of Penn State tells NBC News that McQueary was never offered assistance for his own legal expenses at any time since the allegations became public.

When reached for comment, McQueary declined to offer any statements to NBC News. McQueary remains a resident of State College, unpaid, unemployed, and weighing his legal options against a University he grew up next to, played, and coached for.

In court, prosecutor Joseph McGettigan asked McQueary if he wished to make coaching his career.

McQueary responded, “Yes, I loved it.”