Dan Keller has left an Austin jail, a week after his wife was released – and 21 years after the pair were given a 48-year sentence for sexual assault during America's "Satanic panic" era.

Fran Keller, 63, was released on bond last week after the Travis County district attorney agreed that the trial jury was probably swayed by the faulty testimony of an expert witness.

To supporters of Dan, 72, and Fran Keller, 63, their 1992 trial was a modern-day Texas witch-hunt that recalled the hysterical delusions of seventeenth-century Salem.

The fuse was lit in August 1991, when a three-year-old girl on the way to a behavioural therapy session told her mother that Dan Keller had spanked her at the preschool he ran with his wife in Austin.

The girl told the therapist that Keller had sexually assaulted her using a pen and "pooped and peed on my head".

In subsequent months, two other children made similar claims about the Kellers. By the time the couple went on trial in November 1992, the allegations were significantly more lurid and involved allegations of ritual abuse, murder, dismemberment and animal sacrifice.

The Kellers were found guilty of aggravated sexual assault of a child, even though the three-year-old girl at the centre of the case recanted her claims in court.

Dan and Fran #Keller embrace for the first time in 21 years after their release from prison. pic.twitter.com/V4AWwACczo — Ashley Goudeau (@AshleyG_KVUE) December 5, 2013

A modern-day Texas witch-hunt

The only physical evidence against the Kellers was the testimony of Dr Michael Mouw, who examined the girl in the emergency room of a local hospital after the therapy session and said he found tears in her hymen that potentially indicated that she was molested.

Mouw signed an affidavit last January in which he affirms that he now realises his inexperience led him to a conclusion that "is not scientifically or medically valid, and that I was mistaken."

In an appeal filed on behalf of Fran Keller earlier this year, her lawyer, Keith Hampton, also argued that the state presented misleading evidence about the cemetery, relied on a false witness confession and the testimony of a "quack" satanic abuse "expert", and that suggestive interview techniques had encouraged the children to make "fantastical false statements".

According to police reports and trial records, the children said that Dan Keller killed his dog and made children cut it up and eat it, "baptised" kids with blood and disembowelled pets, forcing children to drink the blood.

The Kellers were also said to have decapitated and chopped up a baby, put the remains in a swimming pool and made the children jump in. In one account, the Kellers were said to have stolen a baby gorilla from a park and Frances cut off one of its fingers.

The pair, who apparently liked to wear robes, were said to have dug graves in a cemetery to hide dead animals and a passer-by who was shot and carved up with a chain saw.

The children were supposedly taken to military bases and on secret aeroplane trips, including to Mexico, where they were abused and returned to the centre in time for their parents to pick them up as normal. They said they were coerced into videotaped sex acts and drugged so they would forget what they had seen.

In court, the jury heard about the extensive attempts by Austin police to substantiate the stories – and Hampton believes that lent them credibility. Police conducted inquiries at nearby airfields, took the children to a cemetery and examined graves from a helicopter using an infrared camera that they said could detect "hot-spots" on decomposing corpses.

In a letter of support for the Kellers dated March 17 this year, James Wood, a psychology professor at the University of Texas at El Paso, wrote: "There is now general agreement among reputable scholars that the Daycare Abuse Panic was a twentieth-century manifestation of 'witchcraft fever' of the same kind that swept Salem, Massachusetts in 1692 and Western Europe in the centuries before that."

A nation panicked over 'rampant' satanism

A nationwide alarm over apparent widespread child sexual abuse at daycare centres was ignited by the McMartin Preschool case in the 1980s, which attracted vast media attention. An initial allegation that the owner of the preschool near Los Angeles had molested a boy snowballed into a seven-year investigation that unearthed tales of ritualistic animal mutilation in secret underground passageways. More than 200 charges relating to the sexual abuse of dozens of children were levelled at seven people but no one was convicted.

In 1988, Geraldo Rivera interviewed the heavy metal singer Ozzy Osbourne as part of a prime-time two-hour NBC special called Devil Worship: Exposing Satan's Underground. "The very young and the impressionable should definitely not be watching this programme tonight. This is not a Halloween fable, this is a real-life horror story," Rivera said at the start in front of a studio audience of "devil worshippers and law enforcers, experts and victims." The show claimed that satanism was rampant across the US.

The allegations against the Kellers did not seem outlandish to a nation in the throes of a 'Satanic panic'

In this paranoid context, Hampton said, the allegations against the Kellers "did not seem outlandish. People were believing this stuff because it was on national TV," he told the Guardian.

"The local news had a [recurring] segment called 'cult crimes'. The Exorcist III was a blockbuster; Satan was everywhere."

The Kellers' freedom comes only a couple of weeks after the release on bail of a group of friends known as the San Antonio Four. They spent more than a decade in prison after being convicted of child sexual assaults that were said to have taken place in Texas in 1994. Their case also featured claims of wild, ritualistic molestation and expert medical testimony that was later exposed as incorrect.

In Arkansas in 2011 a trio dubbed the "West Memphis Three" were set free after high-profile campaigns backed by Hollywood celebrities. The men, then teenagers, had been convicted of murdering three boys in 1993 after prosecutors claimed the defendants were members of a satanic cult. Devil's Knot, a film based on the events and starring Colin Firth and Reese Witherspoon, is scheduled for release in the US next year.

And in Florida, a Cuban immigrant named Frank Fuster is serving a 165-year sentence handed down in 1985 for child molestation but doubts have been raised as to the validity of the evidence against him.

Elizabeth Ramirez, 38, right, and Cassandra Rivera, 37, were recently released after a decade in prison along with the two other members of the San Antonio Four. Photograph: Bob Owen /AP Photograph: Bob Owen/AP

The Keller investigation was one of the last examples of the daycare panic but "very typical of previous cases" according to Mary deYoung, a sociology professor at Grand Valley State University in Michigan who has published extensively on moral panics and sexual abuse. Cultural shifts in the 1980s combined to foster a climate of fear, she said.

The American family was changing, with an increasing number of women going out into the workforce. There was more reliance on daycare and increased anxiety about the welfare of children," she told the Guardian. "There was a huge rise in Christian fundamentalism that made the devil very real and insinuated the devil into a number of social problems ... and a rising interest in the country in the whole issue of trauma."

DeYoung said that suggestive and insistent interviewing strategies prompted children to make up stories and start to believe what they were telling the adults, and that the received wisdom was that children would not lie about such serious crimes. Media and parental pressure obliged the police to give credence even to risible allegations.

"There has been a kind of grudging acknowledgement [from the authorities] that things got out of hand," she said. "I'm not sure that we've learned anything that could prevent a similar moral panic springing up... for example over cyber threats."

The Kellers, who are no longer married but remain close, plan to lead a quiet life in the Austin region, Hampton said.

Though they are free, they have not been formally declared innocent and in theory the state could still pursue a re-trial. As with the San Antonio Four, the case will head to the Texas Court of Criminal Appeals. There is no timeline for the court to examine it. Hampton said he will push for an exoneration that would allow the Kellers to pursue a claim for compensation.

He added that he is "absolutely convinced" that others have been imprisoned in similar cases based on questionable evidence. "It's the problem with basing convictions purely on the testimony of children," he said. "These cases will not stop. The problem is, how do you prove innocence?"