In June of 1996, when the school was nearly 2 years old, auditors from Vavrinek, Trine & Day looked closely at 144 student files from one month. They found that 38 percent of the files had missing signatures or initials. “This high rate of noncompliance is of particular concern,” wrote auditors, “because the documentation is most relevant to substantiating attendance.” Thirty-six files contained no student work samples, which are required for attendance records and are, in fact, the only tangible evidence that a student has been “in school,” since there are no roll sheets for home-schoolers.

Auditors also noted a persistent lack of documentation in the accounting records, and pledged to review other problem areas later. But there would be no later review. Snowline officials had their fill of Cato, and were considering options from publicly renouncing the charter school to calling the District Attorney's Office.

They did neither. Instead, all the players simply agreed not to sue each other and went their separate ways. Cato hastily set up shop next door, at the Apple Valley Unified School District.

The transition was seamless, because Cato had a potent ally in Apple Valley, a senior district official named Robert Turner. The widely respected Turner, a onetime mayor of Apple Valley, was known as an aggressive, plain-speaking administrator, and he quickly emerged as Cato's advocate in Apple Valley. Turner did more for Cato than even Steele had, because Turner also had to handle damage control.

In an October 1996 school-board meeting, Turner pitched Cato as an alternative for students expelled from Apple Valley. Pre-high school students, in particular, had few options once they were expelled, and Cato gave local students a chance to continue their schooling with a curriculum that could be made compatible with Apple Valley's. Turner also implied that full accreditation for the school was a month away. That wasn't true, in fact, although the school is now a candidate for accreditation through the Accrediting Commission for Schools in Burlingame.

(The subject of accreditation would later prove a sore spot for the state, which sent Cato a warning letter to stop referring to itself as “Accredited by the California Department of Education.” The state, officials noted, does not accredit schools.)

One Apple Valley board member was not won over. He didn't see the benefit of Apple Valley sponsorship, because Apple Valley students could attend Cato regardless of which school district authorized Cato.

Yes, said Turner, but Apple Valley sponsorship would mean extra dollars for the school district. In the deal, Apple Valley would get 20 percent of the state funding – as an administrative processing fee – for any Apple Valley students in Cato. Apple Valley also would collect 10 percent for students outside of Apple Valley.

As for Cato's reliability, “They just had an audit,” said Turner. “I've had an oral report on the audit. It came out very well.”

The skeptical board member alluded to rumors of problems in the Snowline district. Turner responded, “It's been somewhat of a personality conflict perhaps,” adding, “There is no legal reason, there is no problem, it's just not a good mix.”

At another meeting, Turner assured the board that “the parents are not paid to instruct their children,” and that Cato has “a board of trustees that run the school as you run this school district . . . There's no shenanigans. It's all aboveboard.”

This last contention was directly contradicted by Vondra's earlier report, which concluded that the school and its governing council were entirely controlled by Cosgrove.

But Turner's word carried weight in Apple Valley. He, after all, was the man who'd been entrusted to manage the school district's bond campaign. The school bond failed, but Turner had better luck with Cato. The Apple Valley school board approved the charter on January 15, 1997.

Even before the school board approved the charter, Turner played another, less visible role for Cato. It was he who managed the Cato petition drive. Under state rules, half the teachers at a particular campus had to petition for a charter school before the school board could take action.

To keep matters simple, Turner set his sights on Willow Park Continuation High School, the district's smallest school, with a staff of 12. He left the petition with the school's principal and asked him to return it with six signatures. The principal dutifully complied with the directions of his superior. It turns out, however, that teachers were only dimly aware of the petition's purpose. When they realized, months later, precisely what they'd authorized, several staff members cried foul. Some teachers were not even informed about the petition, they said; others did not understand what they were signing.

“I was asked to sign this petition about five minutes before class began in the morning,” teacher Karen McGraw told school-board members. “I was asked by someone that I trusted, my administrator, to sign something that I believed was going to bring money to my school. I was not told it was a charter. I was not told that it had any affiliation with a nonprofit or profit organization outside of the school district. So I was really quite surprised when I found out that my name appeared in chartering a school that I have no concept of what it's about. I am very, very upset about this.”


“We didn't ask for this,” added teacher Nancy Christopher. “We don't want this. This isn't something that we as a staff agreed to . . . It was presented in another form other than 'Gee whiz, we're going to charter a school.'”

To add insult to injury, Willow Park had earlier submitted its own homegrown petition to form a charter school, which the school board had rejected. But board members refused to reconsider their Cato sponsorship.

By the time Cato moved to Apple Valley, some of the original problems had been smoothed over. The school, for example, had switched over to something called the MCAD curriculum. The MCAD approach has both proponents and critics, but it is at least a real curriculum system that was created by educators with no ties to Cato.

That was more than enough for Cosgrove, said one former Cato insider. “Tom has no educational prerogatives,” he said. “If it was enough to satisfy the outside monitors, it was good enough for him.” Better still, the outside monitor had become Apple Valley Unified, which had little interest in doing much monitoring.

This free rein allowed Cosgrove to execute his remarkable expansion, until the state started asking questions. Since then, Cosgrove apparently has switched gears, to focus instead on his “core” home-schooling business. The school currently claims an enrollment of 1,400 students. If nothing else, the questionable partnerships gave Cosgrove a considerable grubstake to develop the home-school franchise. “It's like a hooker who spends two years at the Mustang Ranch,” mused one former Cato worker, “then uses the money to fix herself up and marry an attorney in New York.”

Vivian Cosgrove said she knew little about the satellites, but she staunchly defended her husband's intent. “The school went from rags to riches – to a decent bank account,” she said. “We now have money to hire people. But Tom hasn't gotten rich. It's not going into his pocket.”

Another vote of confidence came from Charlie Johnson, a financial consultant who helped Cosgrove straighten out his accounting in the school's early days. “He was probably pushing the envelope on a few things,” Johnson said. “There were no rules for the charter school, and there aren't many rules now. It was a case of 'As long as it doesn't say you can't do it, you can.' But I haven't seen Tom riding around in a Mercedes. You don't do that where we live, because, for one thing, there's a bunch of dirt roads. The money is probably just sitting in Cato's bank account.”

One critic put it another way: “This was Pee-wee's big adventure in the wintertime of his life.”

Cosgrove remains in expansion mode. The Education Foundation has just inaugurated a radio blitz in L.A., asking for donations of books and computers. And the foundation has just opened the Sierra Charter School in the Northern California mountain community of Bridgeport, population 500. The sponsoring school district, Eastern Sierra Unified, has just 630 students spread over an area larger than Rhode Island, but the real plum – just as with Apple Valley – is outside those borders.

Cato's charter allows it to serve students in any California county adjacent to the sponsoring school district. Up north, it means access to the populous Fresno area. To the south, the adjacent-county rule gives Cato access to population centers such as Los Angeles, Riverside and Orange counties.

Even as Cato continues to seek new markets, however, state authorities are rewriting the education code to end some of the practices Cato pioneered. Under legislation signed by the governor in May, the new rules specifically prohibit charter schools from collecting state funds for students enrolled in private schools. In addition, the state Board of Education will be able revoke a charter if there is a finding of financial mismanagement. State education officials already considered the private-school enrollment contrary to the intent of state regulators, but the education code never specifically addressed such practices, and the rules for charter schools are even less restrictive.

To all appearances, Cato remains on solid footing in Apple Valley. At a June school-board meeting, Superintendent Stan Halperin told Weekly reporters that Cato has “provided whatever information we deemed necessary. They have never said no to us.” Halperin's recollection isn't quite correct, according to district correspondence. Cosgrove has refused to turn over copies of his contracts with the satellite locations. Nor will he provide other Education Foundation records, he told the district, until Apple Valley signs a confidentiality agreement. Still, Halperin evinced no worries. “I am very comfortable with the fact that they are doing good things for the kids,” he said.

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