Not sure how handle this.....

[barbie]

I am NCM of two children. Girl-6 and Boy-9.  Their father is remarried, as am I.  I was just made aware of the fact that their 12 yr old SB has been making my children pull their pants down so he can spank them as he sees fit.  If their father or his mother start coming he makes them pull their pants up fast before they see.  The stepmother was made aware of this after a while of this going on and punished the boy.
My question is if this is going on now, when he is only 12 (and been happening for over a year now) what else has he or will he do?  
I asked my children if this was all he did and my son hesitated and then said that was it.  My daughter just looked strange at me as if she didn't understand the question.  So I dropped it.
Am I just assuming the worst?  I just feel sick to my stomach about this. Could this lead to sexual abuse?  How would I even know if the kids don't feel they can tell me?  Is this abuse of any kind?  Do I need to worry?
I have a 13 yr old stepson here also.  And he has never and would never attempt anything like this, and believe me he is no angel!
I am not asking because I want to take the kids or use this.  I want my children safe.  I won't lie, I would give anything to have them with me, but I also won't disrupt their lives if everything is ok and I am just a worried mother.
Advise would be nice.
Thank you.