Former Somerset County school administrator, co-worker indicted in alleged kickback scheme
HILLSBOROUGH TOWNSHIP, N.J. (Somerset County) — A former Hillsborough Township School District business administrator and a former co-worker have been indicted on federal charges alleging they participated in an overtime fraud and kickback scheme tied to a multimillion-dollar school construction project, U.S. Attorney Robert Frazer announced.
A federal grand jury returned a six-count indictment Friday charging Aiman Mahmoud, 56, the district’s former business administrator, and Kenneth Gratto, 54.
According to federal prosecutors, Mahmoud served as business administrator for the Hillsborough Township School District from 2008 through the end of 2021. Prosecutors allege he accepted tens of thousands of dollars in cash kickbacks connected to a multimillion-dollar project that included upgrades to existing school facilities and construction of a new school approved by voters in a 2019 referendum.
The indictment alleges Mahmoud arranged for Gratto to be hired as a site supervisor and owner’s representative to assist companies involved in the construction project.
Federal authorities allege that shortly after Gratto was hired, he agreed to provide cash kickbacks to Mahmoud in exchange for approval of time sheets that significantly overstated the amount of overtime he worked on behalf of the school district.
According to the indictment, Gratto received paychecks from companies involved in the project, which were later reimbursed by the school district. Prosecutors allege Gratto then deposited the checks, withdrew cash for the alleged kickbacks and delivered the money in envelopes at locations selected by Mahmoud, often inside Mahmoud’s unlocked school vehicle.
Federal prosecutors allege Mahmoud received approximately $70,000 in kickbacks.
Mahmoud and Gratto are each charged with conspiracy to embezzle, steal and obtain by fraud funds belonging to and under the control of the Hillsborough Township School District. They also face individual charges of embezzlement, theft and fraud involving district funds.
In addition, both men are charged with conspiracy to commit extortion under color of official right, as well as individual extortion charges.
The conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. The embezzlement and fraud charges each carry a maximum sentence of 10 years in prison and a $250,000 fine. The extortion-related charges carry maximum penalties of 20 years in prison and fines of up to $250,000.
