You are NOT paranoid. The behavior you describe IS pedophilia. Pinching her nipples IS sexual molestation. Rubbing her crotch on his stiff member IS child molestation. If he is treating your daughter, doing the things you described, in front of you, I hate to think what he is doing to her when you aren't around. For the love of God, DO NOT LEAVE YOUR DAUGHTER OR YOUR SON ALONE WITH HIM. EVER. He shouldn't be living under the same roof as your children. Asking him or giving him the ultimatum to stop his behavior will not stop the behavior....he'll just be more secretive about it. Pedophiles don't stop just because you tell them to. They have mental health issues. Sick, sick, sick mental health issues. Pedophiles, often times, are victims themselves and is often the case, the childhood victim become the adult victimizer. It's a vicious cycle that repeats itself generation after generation after generation. What do you know of your husbands childhood? Go with your gut feelings.....especially when it comes to your daughter and son. Mama is always right. Protect them at all costs. You mention you don't live together so I assume his bad behavior is taking place in your home.....invest in a few, small, security cameras....they are relatively cheap now a days and can be hidden just about anywhere....they can even be mounted in a toy teddy bear strategically placed. File a complaint at the police department of your suspicions. Filing a report is not filing charges. Filing a report is just that, a report. Creating documentation should you need it legally down the road. If you and he have court imposed child visitation take him back to court and either sever visitation or have supervised visits only. Unfortunately, you'll need more than just you word in Court. Invest in those security cameras. Seek the help and advise from your loved ones and friends. Let them know what is going on. Secrets have a way of coming to light. They always do. If you choose to remain silent, allowing your husbands behavior to continue, it makes you just as guilty and you, too, can be held accountable for HIS behavior.
You are not being paranoid. In my family counseling course we studied the parameters of what's normal and not normal. Firstly, the older the female child gets, the less time she should spend on Dad's lap. His fondling of your daughter is completely inappropriate! This is actually a firm ofsexual abuse - to fondle her nipples and placing her on his lap during an erection. This should not be and now that you know this is wrong, you could be help liable by a third party who could say you have the power to stop the abuse, but do not. If he refuses to completely stop, then go to a counselor who can counsel him because he is ill. If he refuses to get help, you must remove you precious daughter before she is garbed any more. This is Your daughter. She relies on you to protect her at this young age. If he does not completely stop this behavior you must choose or forever damage Your child. Do not act like this isn't Your fault too. You are in the same room as he. What's next? Sexual molestation!? I know this sounds string, but as a child who was sexually molested myself, I have had many many years of agony - more that you could understand! Save you baby girl from this. My daughter was sexually molested by a day care worker/family member for four years and she has been messed up for years. Save your daughter and yourself. Get to a safe place so he will go and get help. Do not give him 1 minute alone with your children. This is more serious then you think because your love for him gas blinded your ability to see and think clearly. Do not be blind to his actions.