When Penn State built Beaver Stadium (above), the second largest college football venue in the country, the central Pennsylvania school figured on raking in corporate and alumni cash for its investment. But a huge silo of electronic data could make the impressive monument to lucrative intercollegiate sports uninhabitable if either the NCAA or the college itself heed almost unanimous calls to shut down the university’s powerful  football program following an exhaustive seven-month probe of the school by a well-respected and experienced law enforcement official.

It took Judge Louis Freeh, the former F.B.I. director, and his team of investigators many months and millions of dollars to get to the bottom of what happened at Penn State in the past couple of decades. But one thing is clear: Finance and electronic data played an enormous role in what is fast becoming the greatest sports scandal in the history of college athletics.

Update: A new story from Sara Ganim in the Harrisburg, PA, Patriot News reports that three additional alleged victims have come forward, claiming Sandusky abused them in the 1970s and 80s, which further expands the horror of this story.

Main players in covering up child sex abuse by assistant football coach Jerry Sandusky were Gary Schultz, the vice-president for finance and business at the school, and football coach Joe Paterno, who milked the university’s football cash cow for nearly half a century. And it was emails traded between all the alleged co-conspirators that Freeh scrutinized closely to establish exactly what happened and when.

You can bet that the $7 million tab for Freeh’s investigation included a big line item for e-discovery.

Emails between Schultz and others at the university were key to Freeh’s findings that the leadership of Penn State makes it clear that the school was a facilitator of Sandusky’s crimes. Freeh and his team examined 3.5 million pieces of “electronic data and documents” in the course of their investigation.

The date and timestamps on all that electronic correspondence made it especially easy for investigators to establish a timeline and uncover who knew what and when they knew it — a critical component in their assessment of blame for the tragedy.

Emails between senior administrators involving Graham Spanier, the university president; Paterno, the football coach; Timothy Curley, the athletic director; and Schultz, the vice-president for finance and business,  exhibited a “striking lack of empathy” for the children who were Sandusky’s victims.

The report repeatedly emphasizes that the evidence investigators uncovered showed a callous disregard for Sandusky’s victims while seeking routinely to treat their colleague and friend — a suspected pedophile — humanely. There was no information in those millions of electronic documents indicating that Spanier, Schultz, Paterno or Curley made any effort to identify the child victim or determine if he had been harmed.

Analysts are estimating that this horrific cover up and the fact that Sandusky was virtually unimpeded from using the football program and its perks to entice his victims could cost the university upwards of $100 million in compensation, legal fees, loss of corporate sponsorships and maybe even the destruction of its much beloved football program.

Are there lessons to be learned from this for finance and IT? Aside from the obvious “Don’t enable or hide criminal activity,” the folks who handle the purse strings for an organization need to educate everyone about risks and responsibilities that are part and parcel of management.

Emails examined by Freeh often mentioned Sandusky and Paterno by name, but as the plot thickened and the scandal became more apparent, these administrators began using code to refer to individuals in emails. This wasn’t lost on investigators, who not only could see through this amateur tactic, but seem to have also taken its use as a sign the writers knew they were doing something wrong and were attempting obfuscation.

Storage of electronic data is making investigations like the one Freeh conducted much more thorough and often damaging to the target of the investigations.  While many young employees may fully understand how easily tracked their communications are, it’s likely that many older, senior managers are unaware of how their notes, messages and browsing habits are so easily exposed or monitored.

The emergence of technology has made many work tasks much easier and faster. But it’s also created an electronic paper trail that many may be unaware exists and is accessible.

It’s important for all employees to know your organization’s policy for document retention and destruction. They should also be aware of the skills of forensic computer investigators and their ability to retrieve electronic data.

The reputation and survival of an organization can be endangered easily these days not only because most of our communications are stored and organized for easy electronic retrieval. News of our activities spreads quickly through blogs, news sites and social media. Once a story — like the one about child abuse at Penn State — goes “viral,” shutting it down or off is nearly impossible.

Tags: Paterno, Penn State, Sandusky, sexual abuse