A court cleared prominent religious sect member James Duffy of indecently assaulting a girl, but he has confessed to improper actions involving her sister.
And he was punished by sect leader William "Little Pebble" Kamm for his conduct, the Mercury can reveal.
Mr Duffy's startling confession came in a letter of apology to the mother of the two girls.
Last week a Nowra Local Court magistrate dismissed two charges of aggravated indecent assault against the 73-year-old Mr Duffy, who is Little Pebble's right-hand man.
The charges related to two alleged kisses in the early 1990s when one of the sisters was just 13.
Magistrate Doug Dick threw out the charges because the evidence was too flimsy.
The alleged events happened many years ago and ultimately it was her word against his, Mr Dick found.
However, Mr Dick was not able to take into consideration a hand-written letter from Mr Duffy in which he apologised for causing the alleged victim's family "stress and suffering".
The prosecution failed to have the letter accepted into evidence because it did not name the alleged victim. Rather, it named her sister and another family member.
In the letter, which has been subjected by police to handwriting analysis, Mr Duffy said: "I am writing to express my deep concern and sorrow for the actions and advice I have given you and your family in the recent past, that has caused you and your family stress and suffering.
"I deeply regret and am truly sorry for the information concerning the spiritual bonding, marital relationships and sexual advice to (names suppressed) and especially sorry for touching (name suppressed) because of the sexual implications my actions might have provoked.
"Also I deeply regret my bad example to her, as well as the offering of a ring to signify a special relationship."
Mr Duffy, in the 1994 letter, said the Virgin Mary had revealed, through Little Pebble, that the "evil one" had planned to destroy him and others associated with him including Little Pebble.
"Believing these things to be true (but not getting them confirmed through the Little Pebble) I gave advice and directions that contained falsehoods.
"I feel intensely for the pain I have caused God and you over the evil I have committed," he wrote, before seeking the mother's forgiveness.
Mr Duffy's letter was sent under a covering letter from Father Malcolm Broussard, an American-born priest whose status is not recognised by the Catholic Church in Australia.
His letter read: "You are well aware of the situation and events that have occurred over these past several months through Mr Duffy's actions and counsels performed upon or directed to some of your children.
"There was an objective violation of the moral order in the area of sexuality within the context of a presumed special relationship to your daughter (name suppressed).
"Mr Duffy's confusion over the concept of a 'spiritual marriage' or 'spiritual bonding' led him to approach your daughter with certain counsels, proposals and gifts to her (including the gift of a ring) because of his idea about the 'future' of the two of them."
Little Pebble had dealt decisively with the matter, the Broussard letter said, relieving Mr Duffy "of certain responsibilities and requiring exact adherence to certain limitations placed upon him for a term of probation".
"Finally," the letter concluded, "I encourage you to avoid speaking about this matter to others - especially those, who knowing nothing of these matters would be scandalised.
"Furthermore, the evil one would only manipulate the situation and prolong or even make matters worse.
"Also, very importantly, Mr Duffy has a right to his good name and reputation."
The Mercury spoke to both Mr Duffy and Fr Broussard about the letters this week.
Mr Duffy said he would not explain or comment on his letter because it had not formed part of the court case.
"As it's nothing to do with the court case I am not explaining anything," he said.
"As far as I'm concerned that was not accepted into evidence ... you can do what you like. No comment."
Fr Broussard simply to refused to comment.