Chuck Seigan said that Joseph Ricci, owner of the Elan school in Poland Spring, Maine, confronted Michael Skakel during a meeting originally called to berate Skakel for running away from the school.
Seigan said that during this group dressing-down of Skakel, Ricci reminded Skakel of one of the reasons why he was sent to the school in the first place.
``There were many reasons, but he did bring out the fact that there was a murder,'' said Seigan, over the repeated objections of Skakel's lawyers.
Seigan's testimony sharply contradicts earlier testimony from Ricci, who insisted he never heard anything about Skakel's alleged involvement in a murder. From 1978 to 1980, Skakel was a student at Elan, a residential drug treatment center and school for troubled teens.
Prosecutors hope to use Seigan's testimony to convince a judge to force Ricci to testify before a grand jury investigating Moxley's murder.
Ricci, in addition to denying any knowledge of Skakel's involvement in a murder, has refused to testify before the grand jury based on confidentiality laws protecting mental health facilities.
Skakel was 15 when Moxley was beaten to death with a golf club on Oct. 30, 1975. He and his brother Thomas, then 17, have been identified by authorities as suspects in the murder. Soon after the murder, the 6-iron used to kill Moxley was matched to a set of clubs owned by the Skakel family.
Thomas and Michael's father, Rushton Skakel, is the brother of Ethel Kennedy, Robert Kennedy's widow.
Both Michael and Thomas have repeatedly denied any involvement in Moxley's murder. No one has ever been charged, but a one-judge grand jury was appointed in June to reinvestigate the long-stalled case.
Prosecutors say they've been told by several former residents of Elan that Ricci was present and overheard Skakel make admissions to Moxley's murder.
Skakel's lawyer, Michael Sherman, questioned the recollection of Seigan, who testified that he enrolled at Elan at age 20 because he had drug and other behavioral problems.
``You have a young man who's in a drug program - with serious psychological and substance abuse problems - versus Ricci, the person who is in fact running the therapy program. Add to that, a 20-year lapse. Whose recollection might be a little better?'' Sherman said.
Sherman said he believes Seigan's testimony also supported Ricci's claim that most activities that Skakel and other students at the school engaged in was some form of therapy, which is protected by confidentiality laws.
The student assembly Seigan described was known at Elan as a ``general meeting,'' usually convened when a student violated school rules. Attendance was mandatory for all students, Seigan said.
Testimony was scheduled to continue Thursday, when prosecutors were expected to call three more witnesses. After hearing those witnesses and others from attorneys for Skakel and Ricci, Judge Edward Stodolink will issue his ruling on whether Ricci will be forced to testify before the grand jury.
Martha Moxley's mother, Dorthy, and brother, John, attended Wednesday's proceeding.
``I want to do anything I can to let them know I'm in this all the way. This is not something I'm taking lightly,'' said Dorthy Moxley.