Schäfer was a Luftwaffe paramedic in WWII. After the war Schäfer set up a children's home and Baptist ministry in West Germany. In 1959 he was accused of sexually abusing two boys and he fled West Germany with his followers. He resurfaced in Chile and founded the Dignidad Beneficent Society, a society based on Baptist principles. Many defectors from the colony have portrayed the colony as a cult in which Schäfer held ultimate power. Schäfer was ultimately convicted of 20 counts of abuses and five counts of child rape. He died in jail in 2010.
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Tortures occurred at the colony during the dictatorship of Augusto Pinochet by the hands of the Dirección de Inteligencia Nacional (DINA), the Chilean secret police.