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It's not even noon, and Kate Gosselin has already earned the right to be exhausted. She has appeared twice on the Today show and called in to The View, discussing her shock and dismay after learning, she says, that estranged husband Jon, 32, had raided their joint bank account. Now, settling in at her New York City hotel, the reality-star mom is just trying to find a silver lining. Like women everywhere looking for some stress relief, her thoughts soon turn to ... chocolate. "Thursday is Cara and Mady's 9th birthday," Kate, 34, tells PEOPLE, referring to her twins. "That's my focus to get me through the next few days. I'm going to bake a chocolate cake from scratch, and that's going to feel normal and happy."

Lately, "normal and happy" are not words used to describe the Gosselins. Ever since the couple split in June, headlines have focused less on the joys and noise of raising their family of eight—the twins, and sextuplets Hannah, Leah, Aaden, Alexis, Collin and Joel, 5—and more on their ongoing divorce drama. The latest, and most shocking, turn of events happened over the weekend of Oct. 3, when Kate says she discovered a joint bank account had been drained of more than $200,000 by Jon. "When I found out about the money, I sat in the parking lot and sobbed until I thought I was going to pass out," Kate tells PEOPLE. While Jon had spent the weekend living in lavish style in Los Angeles (see sidebar), he was quick to dispute how much cash had actually gone missing—and how long it had taken him to withdraw it. "I made a withdrawal last Thursday for $22,000 ... I took $177,000 over the course of a year—which is my paycheck," he told the television show The Insider , adding that the family has made $2.25 million over the past four years. "Anyone can go to the bank and get your paycheck."

Nevertheless Kate's attorney Marty Singer was unconvinced, noting that an arbitration order forbids Jon from taking any money out of the account at all unless he had Kate's permission. "This is egregious," says Singer. "That he withdrew hundreds of thousands of dollars from an account he knew Kate pays bills from is shocking and appalling." Kate's lawyers have since filed a motion in court, asking it to find Jon in contempt for violating the pre-existing order, and for the money to be replaced. Says Kate: "I'm afraid for my kids. We're not intact, and I'm extra-taxed emotionally and physically. I'm truly afraid that all this is going to negatively affect my children for the rest of their lives, that this is going to harm them in ways that they can't recover from."

Of course, the family has had much to overcome in just the past week alone. On Sept. 29 TLC announced that a revamped show—Kate Plus Eight—would focus on Kate's journey as a single mom and include only sporadic appearances by Jon. Jon, now represented by manager Mike Heller and Mike's father, lawyer Mark Jay Heller, responded with a move that shocked followers of the feud: He petitioned for a 90-day suspension of the divorce proceedings. "This is not a ploy," Mike Heller told PEOPLE at the time. "It's an approach he thinks will help reconcile his friendship with his wife." But one day later, Jon was on the offensive once again, firing off a cease-and-desist order that put a stop to taping the show indefinitely. Saying he'd had "an epiphany," Jon told Larry King on Oct. 1, "My kids should be taken off the show. I don't think it's healthy for them." It was a dramatic reversal for a man who has repeatedly insisted his family benefitted from the program. "We have healthy, happy, well-adjusted kids," he told PEOPLE in May. "Exploit? I don't even want to use the word, because I think it's just ridiculous." No wonder those close to Jon question his moment of clarity. "He's only got one problem with the show: He's not gonna be on it anymore," says one former pal. "There's no doubt in my mind that if the show was going to stay Jon and Kate Plus 8, he'd never have tried to shut it down."

According to a source from the show's production company, Jon was told by TLC he would continue to get paid the same amount he had been for Jon and Kate Plus 8. He did, however, have to get permission from the network before embarking on any other TV shows (one mentioned project: a reality show called Divorced Dads Club, costarring Michael Lohan). That, according to the source, wasn't good enough for Jon. "He wants to be able to do whatever he wants and still make the money he was making. Jon basically said, 'Give me what I want, or I'm stopping the show.'" Jon's attorney Mark Jay Heller says his client has different motives. "Jon made it perfectly clear that he needed to have Kate as a partner in this decision," Heller says, explaining that by pulling the plug so suddenly, "Jon felt there might be an opportunity for a public outcry that would force Kate to come to the table."

One sign of how badly things have deteriorated between Jon and TLC: The production source says that when Jon's recent behavior with new girlfriend Hailey Glassman began making headlines, appalled network brass punished him by reclaiming the special motorcycle made for him on an episode of fellow TLC show American Chopper. "It's sitting at the company's headquarters in Silver Spring, Md.," explains the source. "One of the things Jon's so furious about is that he wants his bike back." On Larry King Live, Jon downplayed the matter, saying, "I don't even care about the motorcycle. Keep it, sell it, donate it to charity, whatever you want to do. But guess what? I want my kids off the show."

While bickering over a bike may seem trivial, Kate is also focusing on the small stuff. "I've had to overcompensate in a lot of ways already," she says of her time with her brood. "I make it clear to them that I'm there for them, because their lunches are packed, because they have the right things in their backpacks. I make sure they know that I am a constant source of love and support and anything they need." Jon's friend Michael Lohan says his pal is also devoted to his family. "Jon is a great father," Lohan says, "I know he loves his kids."

While lawyers for both sides expect a ruling on money matters in the near future, a positive outcome for the show's future—whatever its title—isn't as likely. "It doesn't seem like it's coming back," says a network source. "Maybe we'll revisit it if or when Kate gets full custody.... But the best thing to do might be to just move on with a project that focuses solely on Kate." Even if Kate herself is still waiting for the next round with her ex. "I doubt this is it," she says of Jon's antics. "I would like to speak to him, constructively," she adds. "And if I could, I'd say, please think of your kids. Picture their little faces, picture them as people who are a part of you. And adjust your priorities accordingly."

FOR MORE ON THE GOSSELINS, GO TO PEOPLE.COM/KATE_GOSSELIN

  • Contributors:
  • With Diane Herbst/New York City,
  • Liz McNeil/New York City,
  • Howard Breuer/Los Angeles,
  • Pernilla Cedenheim/Los Angeles,
  • Jen Garcia/Los Angeles.