Friends of Mr. Cesar said that he was the head of a group known as "The Church of the Realized Fantasy," which the police said met at the Walker Street loft.

A member of the group, who asked to be identified as Fred, described it as a "communal marijuana sex church" where members would smoke dope, ask questions of "the pope" and have sex.

Mr. Cesar "believed basically that you should be able to get what you want when you want as you want it, as long as you don't infringe upon the rights of others," Fred said.

Capt. Thomas Fahey, of the Narcotics Division, said Mr. Cesar got much of what he wanted, including a large home in New Jersey and an apartment on East 73d Street. Other Numbers

Mr. Cesar has a record of drug convictions going back to 1980 and has run several telephone schemes in the past, with such names as DIAL-A-JOINT and 777-CASH.