Police say several minors were victimized at the couple's Mesquite home.
Two Dallas school district teachers are accused of engaging in sexual activity with several juvenile victims.
Mesquite police said Jesse and Virginia Castillo, a married couple, allegedly participated in sexual activity with minors who worked for their side business.
Until recently, the Castillos ran a business out of their Mesquite home in which they and their young workers threw parties for children and dressed up as fictional characters.
Police said the victims are female but investigators are still reviewing a mountain of electronic media found inside the Castillo home to identify additional victims.
A neighbor who let his teenage daughter work for the Castillos once said his daughter did not notice anything suspicious.
"Am I shocked? Yes. Am I upset? Yes. I just hate the idea that people do this," he said. "I hope he [Jesse] gets what's coming to him."
Jesse Castillo, 50, is charged with two counts of indecency with a child. He and his wife, Virginia Castillo, 46, both face one count of sexual performance by a child.
"I think it's horrible," next-door neighbor Amy Palmer said.
She said she has seen a number of underage kids at the Castillo home.
Police said Jesse Castillo =teaches at Comstock Middle School and Virginia Castillo is a preschool teacher at Moseley Elementary School.
The Dallas Independent School District said the Castillos are on administrative leave with pay pending an indictment in the case. Further administrative action will be taken if they are indicted, the district said.
DISD spokesman Jon Dahlander said the district is assisting Mesquite police with their investigation.
Jesse and Virginia Castillo are being held in the Dallas County Jail on $150,000 bail each.
NBC DFW's Ellen Goldberg contributed to this report.