TRENTON, N.J. — A Pennsylvania man who supervised construction work for the Hillsborough Township School District has pleaded guilty to taking more than $156,000 from the district through padded overtime and admitted funneling about $70,000 of it back to a top district official in cash kickbacks, federal prosecutors said Friday.
Kenneth Gratto, 55, of Dingman’s Ferry, Pennsylvania, pleaded guilty Oct. 22 before U.S. District Judge Robert Kirsch to one count of embezzling, stealing and obtaining by fraud more than $156,000 belonging to the school district, the U.S. Attorney’s Office for the District of New Jersey said. U.S. Attorney Robert Frazer announced the plea.
Gratto admitted that the kickbacks went to Aiman Mahmoud, who served as the district’s business administrator from 2008 through the end of 2021. Mahmoud helped oversee a multimillion-dollar school upgrade and new construction project that voters approved in a 2019 referendum, and he arranged for Gratto to be hired as the project’s site supervisor and owner’s representative, according to prosecutors.
Soon after he was hired, Gratto agreed to pay Mahmoud cash in exchange for Mahmoud’s approval of timesheets that inflated Gratto’s overtime, Gratto admitted in court.
Gratto billed his time at $150 an hour. During the second half of 2021, he submitted timesheets claiming more than 12 hours of overtime on weekend days when he did no work at all, prosecutors said. The companies that employed him were reimbursed by the school district.
After cashing his paychecks, Gratto withdrew the kickback money and delivered it in envelopes, usually leaving the cash in Mahmoud’s unlocked school vehicle at locations Mahmoud picked, according to the plea.
As part of his plea agreement, Gratto agreed to forfeit about $156,150. The charge carries a maximum penalty of 10 years in prison and a $250,000 fine. Sentencing is scheduled for March 4, 2027.
The charges against Mahmoud remain pending, prosecutors said.
The case was investigated by the FBI’s Newark office, under Special Agent in Charge Stefanie Roddy; Homeland Security Investigations, under Special Agent in Charge Michael McCarthy; and the Somerset County Prosecutor’s Office, under Prosecutor John P. McDonald.
Assistant U.S. Attorney Mark J. McCarren of the office’s Special Prosecutions Division in Newark is prosecuting the case.
Gratto is represented by Assistant Federal Public Defender Timothy Donahue of Newark. Mahmoud is represented by attorney Stephen G. McCarthy of New York.
The charges against Mahmoud are accusations, and he is presumed innocent unless proven guilty.
This report is based on information from the U.S. Attorney’s Office for the District of New Jersey.
Source: U.S. Attorney’s Office press release
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