McQueary's story is central to the case against Curley and Schultz. They testified to the grand jury that McQueary never relayed the seriousness of what he saw. The officials, and Penn State coach Joe Paterno, have been criticized for never telling police about the 2002 allegation. Prosecutors say Sandusky continued to abuse boys for six more years.
McQueary said he had stopped by a campus football locker room to drop off a pair of sneakers in the spring of 2002 when he happened upon Sandusky and the boy in a shower.
He said Sandusky was behind the boy he estimated to be 10 or 12 years old, with his hands wrapped around the boy's waist. He said the boy was facing a wall, with his hands on it.
McQueary said he has never described what he saw as anal rape or anal intercourse and couldn't see Sandusky's genitals, but that "it was very clear that it looked like there was intercourse going on."
Under cross examination by an attorney for Curley, McQueary reiterated that he had not seen Sandusky penetrating or fondling the boy but was nearly certain he knew an assault happened in part because the two were standing so close and Sandusky's arms were wrapped around the youth.
He said he peeked into the shower several times and that the last time he looked in, Sandusky and the boy had separated. He said he didn't say anything, but "I know they saw me. They looked directly in my eye, both of them."
McQueary said he reported what he saw to Paterno but never went to police.
He said he did not give Paterno explicit details of what he believed he'd seen, saying he wouldn't have used terms like sodomy or anal intercourse out of respect for the longtime coach.
He said Paterno told him he'd "done the right thing" by reporting what he saw. The head coach appeared shocked and saddened and slumped back in his chair, McQueary said.
Paterno told McQueary he would talk to others about what he'd reported.
Nine or 10 days later, McQueary said he met with Curley and Shultz and told them he'd seen Sandusky and a boy, both naked, in the shower after hearing skin on skin slapping sounds.
"I told them that I saw Jerry in the showers with a young boy and that what I had seen was extremely sexual and over the lines and it was wrong," McQueary said. "I would have described that it was extremely sexual and I thought that some kind of intercourse was going on."
McQueary said he was left with the impression both men took his report seriously. When asked why he didn't go to police, he referenced Shultz's position as a vice president at the university who had overseen the campus police
"I thought I was talking to the head of the police, to be frank with you," he said. "In my mind it was like speaking to a (district attorney). It was someone who police reported to and would know what to do with it."
Under cross-examination, McQueary said he considered what he saw a crime but didn't call police because "it was delicate in nature."
"I tried to use my best judgment," he said. "I was sure the act was over." He said he never tried to find the boy.
Curley and Schultz are charged with lying to a grand jury and failing to properly report what McQueary allegedly told them.
Their lawyers say the men are innocent and contest McQueary's statements.
District Judge William C. Wenner was hearing testimony Friday to help him decide whether state prosecutors have enough evidence against the pair to send their cases to trial.
Sandusky says he is innocent of more than 50 charges stemming from what authorities say were sexual assaults over 12 years on 10 boys in his home, on Penn State property and elsewhere. The scandal has provoked strong criticism that Penn State officials didn't do enough to stop Sandusky, and prompted the departures of Hall of Fame football coach Joe Paterno and the school's longtime president, Graham Spanier.
Curley, 57, Penn State's athletic director, was placed on leave by the university after his arrest. Schultz, 62, returned to retirement after spending about four decades at the school, most recently as senior vice president for business and finance, and treasurer.