TRENTON, N.J. — Kenneth Gratto pleaded guilty on Thursday to embezzling, stealing, and obtaining by fraud more than $156,000 of funds belonging to the Hillsborough Township School District. The 55-year-old Dingman’s Ferry, Pennsylvania, resident entered his plea before U.S. District Judge Robert Kirsch.

Gratto admitted to embezzling approximately $156,150.00 from the district via an overtime billing scheme that involved falsified time sheets. He billed the district at a rate of $150 per hour for work he did not perform, claiming to work more than 12 hours of overtime on weekends in late 2021 despite performing no actual labor.

The scheme relied on an arrangement with former Hillsborough Township School District Business Administrator Aiman Mahmoud, who served in the role from 2008 through the end of 2021. Gratto agreed to provide cash kickbacks to Mahmoud in exchange for Mahmoud approving Gratto’s time sheets, which exaggerated overtime hours. Gratto admitted to paying approximately $70,000 in cash kickbacks to Mahmoud.

Gratto deposited paychecks from companies reimbursed by the school district, withdrew cash for the kickbacks, and delivered the money in an envelope to Mahmoud. He typically delivered the cash within Mahmoud’s unlocked school vehicle. Mahmoud had arranged for Gratto to be appointed as the site supervisor and owner’s representative to oversee aspects of a multi-million dollar project involving the upgrade of existing school facilities and the construction of a new school building.

As part of his plea agreement with the Government, Gratto agreed to forfeit approximately $156,150.00. The embezzlement charge, which violates Title 18, United States Code, Section 666(a)(1)(A), is punishable by a maximum potential penalty of 10 years in prison and a maximum $250,000 fine. Sentencing is scheduled for March 4, 2027.

United States Attorney Robert Frazer announced the guilty plea on October 23, 2026. Assistant U.S. Attorney Mark J. McCarren of the Office’s Special Prosecutions Division in Newark represents the government, while Timothy Donahue serves as defense counsel for Gratto.

Charges against Aiman Mahmoud remain pending. Stephen G. McCarthy serves as defense counsel for Mahmoud. The charges and allegations contained in the Indictment remain pending as to defendant Mahmoud and are merely accusations, and defendant Mahmoud is presumed innocent unless and until proven guilty.

Federal Bureau of Investigation agents 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 investigated the case.