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.