Amid the lush apple orchards that dot the eastern slopes of the majestic Cascade Mountains, in a tranquil setting that locals call Happy Valley, something terrible has happened.

Depending on which side of this bitterly divided community of 24,000 you believe, it has been either one of the most extensive child sex rings ever uncovered in the United States -- or a massive witch hunt orchestrated by an obsessed police detective, his 11-year-old foster daughter and a few zealous state welfare caseworkers.

What is certain is that during the past two years, dozens of people have been accused of child rape, incest, pedophilia and other unspeakable crimes. Parents allegedly swapped their children at bizarre sex parties and participated in mass rapes and other sexual assaults.

The ritualistic orgies were said to have occurred regularly in the houses of some of the accused, in a group foster home for young girls here and even in a Pentecostal church across the Columbia River in East Wenatchee. There, the 50-year-old pastor and his congregation allegedly engaged in sex acts with prepubescent children in front of the altar while shouting, "Hallelujah, there goes the devil!"

A dozen or more adult men and women, dressed in black and wearing sunglasses, were said to have lined up to have sex with as many children at one location. The price of admission to these orgies, according to one sworn statement, was to bring a child.

Officials of the state Child Protective Services took the allegations seriously. The state removed more than 40 children from their homes and placed them in foster homes. A few were sent to a mental institution in Coeur d'Alene, Idaho, for memory recovery treatment before being brought back to sign sworn statements against adults.

In the past 18 months, cases have been pressed against 29 adults. Twenty have pleaded guilty or have been convicted of either felony or reduced misdemeanor charges, and only one has been acquitted after trial. Two cases were dismissed, and the others are pending. Law enforcement officials here say the proof of massive sexual abuse lies in the record of convictions and guilty pleas.

"These statistics, I think, speak for themselves. As a prosecutor, I'm comfortable with my belief that we had sufficient evidence of probable cause to file these cases and get these kinds of results," said Chelan County prosecutor Gary Riesen.

Even those most critical of the prosecutions concede that the conviction rate, viewed by itself, suggests an epidemic of sexual terror against children has, indeed, been uncovered. Some critics say they have little doubt that in the early stages of the investigation there were provable individual cases of child sexual abuse and incest. But they contend that the probe spun out of control and evolved into a witch hunt as both children and adults involved were coerced into implicating others.

"If you just look at the figures, you have to wonder, My God, what awful things have been going on here?' " said Kathryn Lyon, a public defender whose 250-page investigative report first raised major doubts about the cases. Prosecutions Raise Misgivings

Many of the accused are described in court documents as having low IQs or being otherwise "developmentally disadvantaged." Nearly half are women, an unusually high proportion for child molestation cases.

Another disturbing pattern is that not one defendant who hired private counsel and fought the charges has gone to jail, while most of those who had to settle for public defenders were imprisoned.

Lyon's 250-page report was sent by the U.S. attorney in Spokane to the civil rights division of the Justice Department. Gov. Mike Lowry (D) also has asked for a federal review, and Justice officials say Attorney General Janet Reno is studying the request.

In the the end, critics contend, prosecutors and judges found themselves in a position where they either had to continue pressing the cases or, in effect, admit to participating in a massive miscarriage of justice.

"You can't lump everyone together, either as part of a sex ring or as victims of a witch hunt. The number of times {sexual abuse} occurred is beyond coincidence," said John Henry Browne, a well-known Seattle trial lawyer who has defended several cases here and who has pleaded some of his clients guilty to reduced charges.

"Of the approximately 30 adults charged, maybe there are five sexually abused children. That's a terrible thing by itself, but there's no sex ring here. A lot of innocent people have been ruined," he said. A Zealous Detective, a Troubled Child

The story that turned this quiet community at the confluence of the Columbia and Wenatchee rivers into what now is known as the "sex-crime capital" of Washington state, began in January 1994. That was when Robert Perez was promoted from patrolman to detective and, after a brief training course, became Wenatchee's only child sex crimes investigator.

Perez, according to his critics, seemed ill-suited for the job. He was described in a 1989 departmental evaluation as "egotistical" and "overbearing" and prone to "pick people out and target them." The report said Perez "likes confrontation and likes having power over people -- is like a wound-up wire, ready to spring."

Barely a month after his promotion, Perez and his wife, Luci, took in as a foster daughter a 9-year-old girl, identified in court proceedings as D.E., who had been removed from her abusive parents in one of the town's most impoverished neighborhoods. D.E. had been placed in a group foster home before moving into the Perezes' comfortable home across town. She soon was to become the state's principal child witness.

Perez has testified that it took several months for him to "bond" with D.E., but she eventually disclosed that for years she had been sexually abused by her parents, both described as illiterate, as well as by a neighbor and several other adults. Her parents eventually confessed to sex crimes and were sentenced to prison, the father for 23 years and the mother for four years.

But the allegations did not stop there. On March 13, 1994, in what has become known as the "parade of homes," D.E. was driven around town in a police car with Perez and two Child Protective Services caseworkers. During the ride she identified 21 locations where she claimed she had been sexually assaulted by adults.

Initially, D.E. identified 25 adults and a dozen child victims, but over time, in her unrecorded statements to Perez and his allies in Child Protective Services and in her court testimony, she implicated more than 90 adults, many of them poor and illiterate people from her parents' run-down neighborhood. About seven children have been used by Perez as witnesses in group sex cases, some of whom have since recanted their stories.

As Perez intensified his investigation, his foster daughter's list of people in what she called "the circle" grew to include Robert "Roby" Roberson, 50, the lay minister of the tiny Pentecostal Church of God in East Wenatchee, and his wife, Connie, 45. D.E.'s parents were members of the church's congregation. The Circle' Grows

According to court documents, D.E. described in vivid detail the group sex parties allegedly held at the church, where she said children would sing songs and then have sex on stage with up to 19 adults to "cleanse the devil" out of them.

But Roberson says his legal problems actually began after he publicly voiced his doubts about the existence of a sex ring to a television reporter and at a town forum.

He recalled later attending a sentencing hearing last January for D.E.'s mother, who in exchange for having most of the 4,836 counts of sexual abuse against her dropped, had testified against her husband. After complaining to the judge that Perez had threatened him with arrest, Roberson got up to leave. He says the detective then said to him, "We warned you, Roberson. We warned you."

Two months later, police surrounded the church and arrested the Robersons for child rape and molestation. Their 4-year-old daughter, Rebekah, one of those the couple was accused of molesting, was placed in a foster home and the Robersons were jailed for four months. Bail for Robert Roberson was set at $1 million -- later reduced to $12,500.

Besides D.E., a key witness against Roberson is Gary Filbeck, a congregation member with a sex crimes record dating to 1983. Prosecutors reduced multiple counts of first-degree rape against Filbeck to a misdemeanor charge of assault. According to Roberson's attorney, Robert Van Siclen, Filbeck's plea bargain included an agreement that the length of his sentence would depend on the worth of his testimony against the pastor and his wife, whose trial is scheduled to begin today.

Roberson and his lawyer said police spent 13 hours searching the church for physical evidence of mass sexual assaults, but found none. According to a police report on the search, scores of items were removed, including pieces of carpet and even sections of wallboard, but a state police laboratory found no traces of semen.

Prosecutors say they will present medical evidence, including physicians' examinations of the children allegedly involved, that will prove penetrations had occurred. But Van Siclen said such testimony in prior cases here often has turned out to be inconclusive, and that the two doctors used may not be qualified as expert witnesses. In some trials, the defense has stipulated that the children had been sexually abused and has questioned only by whom and when.

In May, the net cast by Perez and his foster daughter widened to include Honnah Sims, 31, who taught Sunday school at Roberson's church and who was accused of raping D.E. and other children in the church as far back as 1990 -- "long before I ever set foot inside that building," she said.

After borrowing $80,000 to hire her own defense lawyer, Sims was acquitted of all charges. One of the jurors, Danny McGregor, told a local newspaper, "I feel there's a witch hunt. There's just no evidence."

Sims said that during one pretrial hearing, while D.E. was on the witness stand, her husband, John, walked up to the defense table and D.E. suddenly blurted out, "Oh, yes. Honnah's husband did it too." He was never charged.

Sims called the accusations against her "total fantasies of children," and asked, "Is there ever going to be an end to this? Are they ever going to stop these people?"

Another of those accused by D.E. was Robert Devereux, 58, a former title insurance company executive from San Diego, who took over his ex-wife's group foster home for girls here when the couple divorced. Devereux briefly had guardianship of D.E. just before she moved into Perez's home but had her removed for being unruly, which he said angered her.

Devereux, described by social workers as a "model foster parent," was accused by D.E. and a girl identified in court as A.W., who suffers from fetal alcohol syndrome, of leading sex orgies in his group home. He also was implicated by D.E.'s 13-year-old sister, M.E., who also lives with Perez. However, A.W. later admitted to her social worker, Paul Glassen, that she had "told a bunch of lies about Dad" and child rape charges that could have resulted in eight life sentences were reduced to two misdemeanors.

Devereux said he had already sold his home and was $50,000 in debt, so he pleaded guilty to charges of having spanked a child and of obstructing justice by warning someone he was about to be arrested.

"I've lost my home, my savings and my self-respect. It's ruined my life," Devereux said in an interview.

Meanwhile, Glassen was fired by Child Protective Services -- for reporting A.W.'s recantation, he said. Then his name suddenly appeared on Perez's list of alleged participants. Rather than risk having his child taken away, he and his Canadian-born wife moved to Vancouver. Questions of Procedure

In interviews, sworn statements and court testimony, Wenatchee residents caught up in Perez's far-reaching investigation described him as a man obsessed with his new job and bent on ridding Wenatchee of "perverts."

His interrogation technique, described in interviews with a half dozen suspects, relied on threats, badgering and coercion, followed by promises of reduced charges and freedom if confessions that he typed from his notes were signed.

The detective's aggressive style was described by Kim Allbee, 11, whose mother, Donna Rodriguez, was arrested last February and jailed on 168 counts of sexual assaults on children, including her own daughter.

In an interview, Kim said she was pulled out of class the morning her mother was arrested and was questioned for four hours by Perez. He warned her, she said, that she would never see her mother again unless she admitted to participating in sex orgies.

"He kept saying that I was molested by all these people, and I kept saying, No, no, no.' He then picked up the phone and said, If you don't start zooming in on this, I'm going to call and have your Mom arrested,' " Kim said.

She said she was shaking and crying uncontrollably, and that finally she admitted to participating in sex orgies with a number of adults, including her mother, and 14 children. However, she later recanted her statement, and after Rodriguez hired a lawyer, prosecutors dropped all 168 counts two days before her trial was to begin in August.

Perez declined to be interviewed for this article, saying through an intermediary that he had been ordered by superiors to no longer speak with reporters.

In court testimony, Perez has said he never tape-recorded or videotaped interviews with the children who alleged they were sexually assaulted or with the accused adults. He also has said he routinely destroyed his notes after typing statements or confessions for his interview subjects to sign in order to avoid being cross-examined about prior inconsistent statements.

Several officials involved in the prosecutions, including prosecutor Riesen and Wenatchee Police Chief Kenneth Badgley, have defended Perez's investigative techniques and have said that videotaping children's statements, while common in many jurisdictions around the country, is rarely done in Washington state.

However, when asked about Perez's practice of destroying his notes, Riesen replied, "That's not a good thing. It's not a practice anyone would say, Let's do that.' "

Riesen also said that the sex-ring investigation has been "officially closed" and that in January Perez will be transferred back to uniformed patrol duty as part of "normal officer rotation."

Asked if he would reopen the investigation if new evidence is uncovered, Riesen said, "I don't know. I'm not a complete masochist. Frankly, I've seen enough evidence."

Tim Abbey, a Child Protective Services supervisor who said he sat in on Perez's questioning of at least 10 children and adults, said, "I never observed him coerce, threaten or intimidate children or adults. I think he's been very effective."

As for D.E., she returned to Wenatchee last week after being confined to a mental institution as a result of screaming fits. But prosecutors said she no longer will be used as a prosecution witness because she is now having difficulty remembering the alleged sexual assaults. CAPTION: Police Detective Robert Perez, above. Below, minister Robert Roberson, one of the accused. CAPTION: Linda Miller, left, and Donna Hidalgo before trial this summer. Miller, convicted of eight counts of molestation, is serving 33 years and plans to appeal. Hidalgo pleaded no contest to one count of incest after her trial on eight counts of rape and molestation ended in a hung jury; she awaits sentencing. CAPTION: Connie Roberson testifies at the trial of Honnah Sims in July. Sims was acquitted. Roberson and her pastor husband, Robert, are now on trial.