Los Angeles Unified Schools Supt. Alberto Carvalho launched “Ed” the AI chatbot amid enthusiasm in March 2024, presenting a revolutionary tool that will put the district at the forefront of school technology.
But the billion-dollar project failed within months and was never fully launched.
Now, the deal to bring ED to the nation’s second-largest school — and Carvalho’s longtime relationship with Debra Kerr, a Florida consultant who helped sell the technology to the district — is being scrutinized as part of an intense FBI investigation that includes Wednesday morning raids on Carvalho’s San Pedro district office and Kerr’s home.
LAUSD’s contract was placed with a Boston-based startup called AllHere. But behind the scenes the company was collapsing and eventually announced that they were dating. Its founder, Joanna Smith-Griffin, has been indicted for allegedly defrauding investors. The charges were brought eight months after he and Carvalho stood side by side during the interview.
The raid marks a dramatic increase in the careers and records of Carvalho and Kerr, who has filed a claim that the defunct AllHere owes him $630,000.
Neither Carvalho nor Kerr have been charged with a crime. The FBI has not released information about the nature or scope of the investigation; search warrant affidavits are sealed.
Sources with knowledge of the investigation told The Times that Carvalho, not LAUSD, is the focus of the investigation. The raid is linked to a failed chatbot contract and falls under the broad category of financial crisis, sources said.
Neither Carvalho nor Kerr responded to requests for comment. Carvalho, who is usually a public figure in the school system, has been quiet. The Los Angeles Board of Education was scheduled to meet Thursday afternoon and the only topic on the agenda was “Public Employment: General Superintendent of Schools.”
The failed company behind the chatbot
Smith-Griffin was indicted in November 2024. Federal court filings for the Southern District of New York show that his trial has been postponed several times after requests from prosecutors and defense attorneys.
The most recent request to postpone the scheduled status conference came in September. The prosecutor said the extra time “will allow the parties to discuss the case.”
Lou Shapiro, a prominent defense attorney not involved in the case, warned that “the Trump administration is often happy to raid.”
He said people should not jump to conclusions about who might be guilty of wrongdoing.
The Trump administration has targeted fraud
The Trump administration and Bill Essayli, the first assistant US attorney in Southern California under Trump, are heavily focused on fraud. The administration has been accused – including by former law enforcement officers – of targeting perceived political enemies.
Carvalho could fall into that list. He has been outspoken in the school system’s defense of immigrant rights and its criticism of Trump’s actions, including the administration’s opposition to diversity, equity and inclusion programs.
However, the federal case against Smith-Griffin began before Trump took office.
“This may be going nowhere,” said Neama Rahmani, a former federal prosecutor. “You don’t attack a chief’s house without a plan ahead.” If the target also happens to be a “political enemy of the administration,” the investigation “may be a priority,” he said.
I Carvalho-Kerr connection
Carvalho and Kerr had a professional association dating back to his long tenure as superintendent of Miami-Dade County Public Schools, according to social media and Miami news reports. Kerr has promoted educational products for various firms.
A number in the industry said that it would not be wrong for a person with his skills and connections to issue a 10% commission for the products he gets a contract for.
His $630,000 payment demand from AllHere, cited in bankruptcy documents, corresponds to about 10% of the value of its contract with LA Unified.
Kerr is listed as a creditor to AllHere in the bankruptcy documents. According to AllHere’s contract with LA Unified, the district is the alleged victim: AllHere has never delivered the various contracted services.
LA Unified, however, has maintained that it was not financially harmed. Officials say they paid about $3 million of the $6 million in contracts, and that some services and products were delivered to the $3 million paid.
Amazing collaboration
AllHere had limited experience in artificial intelligence – and in 2023 AI was an emerging industry, especially in education. AllHere is best known for designing an automated system that can deliver personalized messages to students and families, but it fell well short of what is commonly understood as artificial intelligence.
Such messages can be generated, for example, if a student misses school.
One of the company’s clients was Miami-Dade. Messages to students may touch on academic issues and social-emotional development, according to the Florida school system’s bidding documents.
AllHere apparently signed a contract with Miami-Dade after Carvalho left the school system. The company later defaulted on that contract, records show.
Carvalho said he had no role in the appointment of AllHere to work at LA Unified. He said this company was chosen when the district was conducting a formal bidding process for contracts.
AllHere competed with two other applicants for the job. Under LA Unified rules, a panel will review and receive bids. Underpinning the deal was a plan to start a long-term partnership: LA Unified’s product could be marketed to other school systems — with profits and licensing fees shared by AllHere and LAUSD.
In a later defense of AllHere’s selection, LA Unified’s chief executive said the district is not alone in being forgotten. The official pointed to positive press clippings about the company and its founder as evidence.
A celebration at the beginning
The raid was a dramatic turn in the effort.
“This is a technology that becomes a personal assistant for students,” said Carvalho at an exhibition at the Roybal Learning Center, west of the city, in March of 2024. “It eliminates day-to-day navigation … it blurs the data in a way that delivers what students need.”
In December 2022, Carvalho was already talking about his vision for each student with a plan to accelerate their studies. In his mind, this goal quickly married the concept of artificial intelligence and an accessible interface that would become Ed.
The announcement put LA Unified on the front page of a rapidly changing technology landscape.
Carvalho then appeared with Smith-Griffin in an influential technical conference.
But only a few schools tried, each with a sample of students and parents. And the company was already falling behind the scenes, its technology quickly being overtaken by companies with better resources to refine and develop their products.
In June – three months after Ed started at the top – most of the AllHere staff was laid off. In the bankruptcy filing, one of the biggest assets at the time was the LAUSD contract worth $2.88 million. Criminal charges against Smith-Griffin followed.
