Kenneth Gratto

Introduction

Kenneth Gratto, 55, of Dingman’s Ferry, Pennsylvania, pleaded guilty on October 22, 2026 before U.S. District Judge Robert Kirsch to embezzling, stealing, and obtaining by fraud more than $156,000 of funds belonging to the Hillsborough Township School District (HTSD) in New Jersey, in violation of Title 18, United States Code, Section 666(a)(1)(A). U.S. Attorney Robert Frazer announced the plea, which closed the public-corruption side of a fraudulent overtime scheme run together with the district’s former business administrator.

Background Information

The scheme grew out of a construction program, not a payroll office. Aiman Mahmoud, who served as the HTSD Business Administrator from 2008 through the end of 2021, helped oversee a multi-million dollar project upgrading existing school facilities and constructing a new school building that had been greenlighted by a 2019 referendum. Mahmoud arranged for Gratto to be appointed as the site supervisor and owner’s representative to oversee aspects of the project including safety monitoring, and to assist two companies involved in implementing the referendum’s goals — a position of trust inside a project funded by district taxpayers.

The Controversy or Incident That Led to Their Cancellation

Pleaded guilty. Gratto admitted the kickback-for-timesheets arrangement and the $156,150 total embezzled from the district, agreeing to forfeit that amount.

Shortly after being hired, Gratto admitted, he agreed to pay substantial cash kickbacks to Mahmoud in exchange for Mahmoud approving timesheets that substantially exaggerated the overtime hours Gratto worked, billed at $150 per hour. Gratto admitted regularly submitting timesheets claiming more than 12 hours of overtime on both Saturdays and Sundays throughout the latter half of 2021 despite performing no work on those days. After each paycheck from the companies — which were themselves reimbursed by the district — Gratto deposited the check, withdrew the kickback amount in cash, and delivered it in an envelope at a location of Mahmoud’s choosing, typically inside Mahmoud’s unlocked school vehicle. In total Gratto admitted embezzling approximately $156,150 from the HTSD with Mahmoud, of which roughly $70,000 went to the administrator.

Public Reaction and Consequences

The embezzlement count carries a maximum of 10 years in prison and a $250,000 fine, and sentencing is scheduled for March 4, 2027. Under the plea agreement Gratto has agreed to forfeit the $156,150 the scheme extracted from the district. The investigation was worked by the FBI under Special Agent in Charge Stefanie Roddy in Newark, 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 Special Prosecutions Division is handling the prosecution.

Current Status

Gratto awaits sentencing on March 4, 2027, represented by Timothy Donahue of the federal defender’s office in Newark. The charges against Mahmoud, the former business administrator, remain pending — the release states they are merely accusations and that he is presumed innocent unless and until proven guilty. The cash-in-envelope mechanics of the admissions, including weekend overtime claims for days on which no work was performed, make the district’s loss and the administrator’s gain two halves of the same admitted transaction.

Impact on Their Career/Life

Gratto’s role as a site supervisor and owner’s representative on public school construction is finished: a guilty plea to federal program embezzlement, with a sworn admission that his own timesheets were fiction approved for cash, is a permanent disqualification from any position of financial trust on public projects. The $156,150 forfeiture strips the scheme’s proceeds, and the March 2027 sentencing will decide whether the 10-year maximum is approached. For the district, the case documents how a referendum-funded building program — the kind voters approve once — can be quietly taxed from inside by the people hired to guard it.

Sources

• U.S. Attorney’s Office, District of New Jersey, “Former Hillsborough Township School District Worker Admits to Paying Approximately $70,000 in Kickbacks to Former School District Business Administrator as part of a Fraudulent Overtime Scheme” — source