DEL RIO, Texas (AP) _ Something strange happened on Election Day in this dusty border county: The Hispanic candidates for sheriff and county commissioner who were leading all night ended up losing when absentee ballots came pouring in for two whites, one of them a former Ku Klux Klansman.

A closer look at the 800 mail-in ballots revealed that almost all were cast by military members and their dependents _ most of them, whites who were once stationed at Laughlin Air Force Base but hadn't lived in Val Verde County for years. Val Verde County is 70 percent Hispanic.

``We all thought that this was a fraud and that democracy was not being respected,'' said Jovita Casarez, who filed a federal lawsuit over the election. ``When this type of fraud is committed, it's embarrassing for all the nation.''

But the winners said they only took advantage of a longstanding policy that allows military families to vote in the place they call home, no matter where they live.

``This election system and absentee balloting has been in place for years,'' said Republican Murry Kachel, who won his county commissioner's seat by 113 votes. ``Whether a candidate knocks on your door in person or with a 32-cent stamp should not make any difference.''

However, the feud has opened up debate on the fairness of the military voting system. The lawsuit could have far-reaching effects, determining once and for all what military families on the move can list as their legal residence and where they can mark their ballots for local elections.

Military families retain residency in one place for the sake of convenience, so that they don't constantly have to get new driver's licenses and registrations.

Texas, with 18 military bases, is particularly attractive as a place of residency because there is no state income tax and because public college tuition for residents is among the cheapest in the nation. Even George Bush claimed a Houston hotel suite as his official residence while he was president.

The ``phantom voters,'' as some people in Val Verde County call those who reside here on paper only, helped bring about Republican sheriff candidate D'Wayne Jernigan's 267-vote victory over Democratic interim sheriff Oscar Gonzalez Jr., and Kachel's victory over Democrat Frank Coronado for county commissioner.

A federal judge has barred Jernigan and Kachel from taking office until residency questions are settled in a separate state lawsuit filed by the Democratic losers. That case is set for April 21.

Lawyers for Kachel said he and Jernigan were the only candidates who campaigned among federal mail-ballot voters, and that Democrats had the same opportunity.

The Republicans' victory would give the GOP its first majority on the commissioners court in the 111-year history of Val Verde County, a place of 42,000 residents, 2,900 of them at the Air Force base.

``I followed the law,'' said Val Verde County Clerk Maria Elena Cardenas, who oversaw the November election.

Texas has a ``flexible definition'' of residency that largely depends on the voter's intent, said Ann McGeehan, deputy assistant secretary of state for elections.

The Texas Secretary of State's Office says service members can apply for a ballot by supplying a Texas address for a place the voter plans someday to return to. The voter doesn't actually have to have a home at that address.

``We are allowed legally to do this,'' said absentee voter Carol Belongia, 44, of Colorado Springs, Colo., whose husband is an Air Force attorney and had his first assignment at Laughlin.

They moved away in 1988, but still keep all three cars registered in Val Verde County and maintain it as their address on their driver's licenses.

``It's kind of tough being in the military,'' she said. ``One of the few benefits is we can maintain our state residency like that, to give us some sense of permanence, of continuity.''

According to court papers, another absentee voter was a man who spent three days at his grandmother's home in Val Verde County during his honeymoon 25 years ago. He still maintains that as his address.

``What happens to your representation when you have phantom voters?'' candidate Gonzalez asked. ``What happened to the one-man, one-vote principle?''

Texas Rural Legal Aid claimed virtually all of the 800 votes in question were military officers and their dependents and that 95 percent were white and 85 percent were Republican. TRLA questionnaires to the out-of-town voters found that 457 had last resided in Val Verde County more than four years ago.

Meanwhile, Sens. Phil Gramm and Kay Bailey Hutchison, both Texas Republicans, have complained that Texas Rural Legal Aid is trying to keep military members from voting. They also contend TRLA _ which receives most of its budget from the federally funded Legal Services Corp. _ should not have involved itself in an election dispute.

TRLA eventually withdrew from the federal lawsuit but denied it did so for political reasons.

Fueling the dispute is Kachel's membership in the KKK while he was in the Air Force in Germany in 1981.

Kachel, who retired from the military last year to run for office, denied under oath in court papers that he had been a member. But he acknowledged to the Del Rio News-Herald _ and to The Associated Press on Friday _ that he was a KKK member but dropped out and later denied his involvement because he was embarrassed.

``I admit and regret that I fell in with a crowd whose mystery, secrecy and security seemed real `cool' at the time,'' Kachel told the newspaper. ``During the two years I was a member of that group, I knew deep in my heart that I didn't possess the same ideas or ideals they did.''

David Hall, executive director of Texas Rural Legal Aid, which filed the lawsuit on Ms. Casarez's behalf, called Kachel ``a poster child for the need to enforce residency requirements.''

``It re-emphasizes the basic principle _ you vote where you live,'' Hall said. ``You're more likely to know who you're voting for.''

Ms. Casarez said that since the controversy arose, callers have harassed her and people have cased and photographed her home.

``I'm disillusioned,'' she said. ``But this does not take away my enthusiasm. I go forward.''