Charging documents say three girls told police that Vargas had touched their private parts multiple times, and two of them said it had happened every day since they began attending the day care.
The allegations came to light after two sisters, ages 5 and 7, told their mother about a game Vargas played with them involving disrobing them and touching their private parts. The girls alleged that Vargas did so with all the girls, including an infant.
On Tuesday, as Vargas' attorneys continued presenting their case, jurors heard testimony from Kamala London, a developmental psychologist.
London testified that children are often influenced by peers or when they talk with other people about an event. Those interactions can shape a child's memory and sometimes lead them to report things that didn't occur.
London also said it was concerning that one of the alleged victims was interviewed seven times, during which the interviewer "prompted" her more than 100 times about possible sexual abuse. Such questioning could have led the child to give details that may not necessarily be true, London said.
However, London said that even when a child gives false statements, it does not necessarily mean they knowingly lied or had malicious intent.
Vargas' wife, Mabel Vargas, testified Tuesday about normal activities as she ran the day care, including feeding the children and taking them to school. The woman said her husband was most often in charge of driving the children to and from school.
Mabel Vargas, who has not been charged in connection with alleged abuse, said she was in Chile with her grandmother when her husband was arrested in December 2011.
Vargas was initially charged with 10 additional counts of lewdness after allegations that the man urinated in front of the girls with the bathroom door open. However, those charges were dismissed in July after a preliminary hearing because the girls' testimony did not reflect those allegations, according to prosecutors.