Big Money in Kids

Ora Carrier has been teaching children at the Nikka Tiffany School in South L.A. for nearly 25 years, and it's never been easy. She has to keep prices at her private school affordable to middle- and working-class families, leaving her with just enough money to keep the doors open, let alone to buy new books and computers. So she was thrilled the day she got a call from something called the Cato School of Reason.

"They said they wanted to help the private schools in the community," recalled Carrier. Cato promised funding based on Carrier's enrollment in exchange for work samples from students and some basic testing. She understood Cato to be a government program of some sort.

"I felt that they wanted to know what the private schools are doing - if they are teaching the children," said Carrier. "I didn't have a problem with that. My children can do math, and they can read and write. I didn't mind anyone coming in."

As for the funding: "I thought, 'At last we're getting help.' Even if it's just enough money to supply the classrooms, fix up the playground, put paint on the building."

In fact, there was more money than that, but Carrier wouldn't see it. The real payoff went to Cato itself.

Without knowing it, Carrier had signed her student roster over to Cato, a maverick charter school based in Victorville that was then contacting private schools across Los Angeles County in an effort to build enrollment and, in turn, bank state education funds. All told, in the past two years Cato garnered millions of state dollars through "satellite" operations such as the Nikka Tiffany School. State officials have characterized Cato's alleged enrollment practices as unethical and possibly illegal.

The Cato school was profiled in these pages two weeks ago, including its origins as a home-school support service, the problems it encountered with its original sponsors at the Snowline school district in San Bernardino County, and the increasing concern expressed by state officials, who concluded that Cato was capitalizing on loopholes in the state education code governing charter schools.

This week's article looks in detail at how Cato and founder Thomas A. Cosgrove, a 67-year-old businessman, expanded the operation to encompass some 40 Cato satellite locations, many of them private and church schools, affiliations that continued until as recently as last June. In some cases, the private school operators served as willing dupes who thought they'd tapped into a new stream of government funding. School owners interviewed by the Weekly said they never saw all the cash they were promised, but only a few realized they'd been drawn into a legally dubious scheme.

Cato management would not comment for this story, but Cato's activities were clearly spelled out in documentation obtained by the Weekly and in the accounts of numerous Cato insiders who spoke on or off the record. In previous interviews, Tom Cosgrove noted the lack of guidelines governing charter schools, adding that until rules are established, "We are going to make them up as we go along." The state has since passed legislation specifically banning Cato's practice of enrolling private-school students.

Key to Cato's rapid expansion from a small, high-desert charter school to a million-dollar enrollment clearing-house was Cosgrove's ability to line up a team of high-profile community figures, including retired Congressman Mervyn Dymally; Melanie Andrews, an elected board member of Compton College; and Brother Modesto Leon, the widely admired East Los Angeles-based activist and educator. Help also reportedly came from Mark Dymally, Mervyn's son and an elected board member of the Metropolitan Water District, though the younger Dymally insists that he had no connection to Cato.

Mervyn Dymally and Andrews were paid for their services to Cato, although both began to have difficulties with the school. Through it all, Cato CEO Cosgrove was obsessed with pushing up enrollment numbers - until last December, when his practices came to the attention of state officials. Even then, Cosgrove only backed down partway.

At its estimated peak, Cato's enrollment numbers rose as high as 3,500 - with each student worth $20 per day in state education funds. The enrollment at Nikka Tiffany alone, a small school with about 48 students, generated an estimated $173,000.

And what did Cato provide to Nikka Tiffany students? Some photocopied handouts, a few textbooks and one round of schoolwide testing that lasted for parts of two days. Carrier was grateful for the handouts, which she found helpful, but she, in fact, was doing more legwork for Cato than the other way around.

Cato required that Carrier collect work samples from her students, about one page per student per day, which Cato kept on file to show to auditors as proof that its students were busily employed. But the Nikka Tiffany students, by and large, weren't doing Cato work. "It didn't change anything," Carrier said of Cato's contribution.

The same goes for the operator of another South Los Angeles school, who spoke with the Weekly on the condition of anonymity because, she said, Cato administrators still owe her money and she doesn't want to anger them. Cato also broke promises of computers and new textbooks. "Getting computers was one of the first things that lit up my eyes when I was approached," she said. "When you hear computers and books, your eyes light up and your heart jumps because you want it so bad."