LAUSD's "Ed" AI Chatbot Project Fails Amid FBI Investigation and Bankruptcy

Los Angeles Unified Superintendent Alberto Carvalho introduced "Ed," an AI chatbot, in March 2024, presenting it as a significant technological tool for the district. However, the multimillion-dollar project failed within months and did not fully launch.

The agreement to bring "Ed" to the school district, along with Carvalho's professional relationship with Florida consultant Debra Kerr, is now under scrutiny as part of an FBI investigation. Early morning raids were conducted at Carvalho's San Pedro home and district office, and at a home owned by Kerr.

The LAUSD contract was made with Boston-based startup AllHere, which subsequently experienced a collapse and declared bankruptcy. AllHere's founder, Joanna Smith-Griffin, was indicted on allegations of defrauding investors eight months after the chatbot's unveiling.

Neither Carvalho nor Kerr has been charged with a crime. The FBI has not publicly disclosed information about the investigation's nature or scope, and search warrant affidavits remain sealed.

FBI Probe Focuses on Superintendent Carvalho

Sources familiar with the probe indicated that Carvalho, rather than LAUSD, is a focus of the investigation, which is connected to the failed chatbot contract and categorized broadly under financial issues.

Kerr has filed a claim asserting that the defunct AllHere owes her $630,000. Carvalho and Kerr had a professional association predating his tenure at LAUSD, stemming from his time as superintendent of Miami-Dade County Public Schools. An industry figure suggested that a consultant with Kerr's profile might command a 10% commission on secured product contracts, aligning with the approximate value of her claim relative to AllHere's contract with LAUSD.

LAUSD's Financial Position and Contract Details

LAUSD officials have stated that the district was not financially harmed, having paid approximately $3 million of the $6 million contract value, with specific services and products delivered for the amount paid. AllHere is listed as a creditor in bankruptcy documents, while LAUSD is an alleged victim due to undelivered services.

AllHere had limited experience in artificial intelligence when the contract was signed. The company was primarily known for an automated messaging system, not advanced AI. Miami-Dade County Public Schools was also a client of AllHere, signing a contract after Carvalho's departure, which the company later defaulted on.

Carvalho has stated he played no role in the selection of AllHere for LAUSD, asserting the company was chosen through the district's legally mandated contract bidding process. The initial plan involved a long-term collaboration, where the LAUSD product would be marketed to other school systems with shared profits and licensing fees.

"Ed"'s Brief Existence

At the March 2024 demonstration, Carvalho presented "Ed" as a "personal assistant to students" designed to simplify navigation and utilize data for student needs. The project intended to support individual academic acceleration plans.

Despite its public debut, only a small number of schools piloted the chatbot. By June, three months after the launch, most of AllHere's staff were laid off, and Smith-Griffin faced criminal charges. In its bankruptcy filing, one of AllHere's largest assets was an LAUSD contract valued at $2.88 million.