The group's reclusive leader is accused of sexually abusing scores of young boys. Former political prisoners say they were imprisoned and tortured in underground dungeons in the group's compound. An American who disappeared on a hiking vacation is reported to have been executed there. More than 50 other charges are pending against the group and its leaders, ranging from kidnapping and forced labor to fraud and tax evasion.
Yet the paramilitary religious sect known as Colonia Dignidad continues to flourish here in a 70-square-mile enclave in the Andean foothills that remains, in the words of a recent Chilean congressional report, a heavily armed "state within a state."
Protected by barricades, barbed wire, roadblocks, searchlights and hidden cameras and microphones, Colonia Dignidad has for more than 40 years been the fortress home of about 300 people, most of them German citizens. Their only loyalty is to the sect's German-born founder, Paul Schäfer, who likes to call himself the Permanent Uncle and preaches an apocalyptic creed that includes strong anti-Semitic and anti-Communist elements.
"The question that must be asked is this: How can this be possible?" Georg Dick, the German ambassador to Chile, said in an interview in the capital, Santiago, 250 miles north of this place where the group holds sway. "I have heard a lot of explanations, but I still do not understand how a group living in a closed area, accused of various crimes, can defy a free and sovereign state."
Chilean investigators say part of the answer lies in the "web of protection" supplied by sympathetic military and police officials nurtured by the group's leaders during the long dictatorship of Gen. Augusto Pinochet. Though the general's rule ended nearly 13 years ago, those allies still hold powerful positions.
With this influence, Colonia Dignidad has managed to fight what Jaime Naranjo Ortiz, a senator who led a committee that investigated the group in the mid-1990's, called "a guerrilla war in the courts" financed largely by its success in transforming a colony founded as a charitable organization into a diversified business group.
"They easily control properties and enterprises worth more than $100 million through their various holding companies," he said. "They are involved in real estate, mining, commerce and agriculture, just like any of several better-known business conglomerates in this country."
Other legislators suspect that the Chilean government is reluctant to move against Colonia Dignidad for fear of a collective suicide, like the one in Jonestown, Guyana, in 1978, or a violent confrontation similar to the deadly standoff at the Branch Davidian compound near Waco, Tex., in 1993. The group has encouraged such concerns by distributing fliers around its compound warning that it is prepared to "take a drastic decision" if pushed too far.
An itinerant lay minister preaching a fiery, millenarian brand of Protestantism, Mr. Schäfer, who was a nurse in the Luftwaffe during World War II and is now in his 80's, arrived here with a small group of his followers in 1961. Even then, he was fleeing sexual abuse charges based on complaints by boys in an orphanage he administered in Germany, though the Chilean government appears not to have been aware of those charges at the time.
Through the years, Colonia Dignidad leaders courted sympathetic military officers and members of Chile's German immigrant population by inviting them for visits and offering them and their families gifts or free medical care. After General Pinochet seized power in 1973, ties grew even closer, developing into a de facto alliance.
According to a government investigation a decade ago, the group bought a house here in the mid-1970's and donated it to state intelligence for use as a regional headquarters. A police telephone line was installed at the colony compound, human rights groups say, and the intelligence chief, Gen. Manuel Contreras, became a frequent visitor. Political prisoners whom the dictatorship wanted to keep out of sight were hidden in cells within Colonia Dignidad and tortured, those who survived have testified.