Former Hillsborough school worker admits stealing $156,000 through overtime scheme

The scheme involved a multimillion-dollar school construction project, with contractors paying for work that was never performed.

A former Hillsborough Township school district worker has admitted stealing more than $156,000 in taxpayer funds by submitting fraudulent overtime claims and paying the district’s business administrator roughly $70,000 in kickbacks to approve them.

Kenneth Gratto, 55, of Dingmans Ferry, Pennsylvania, pleaded guilty Oct. 23 before U.S. District Judge Robert Kirsch to embezzlement in connection with the scheme, according to the U.S. Attorney’s Office.

Gratto was hired in 2021 as a site supervisor and owner’s representative for a multimillion-dollar project to upgrade the district’s school facilities. He was brought on by Aiman Mahmoud, who served as the district’s business administrator and board secretary from 2008 to 2021.

Shortly after Gratto’s appointment, the two men agreed that Mahmoud would approve inflated timesheets in exchange for cash kickbacks, prosecutors said. Gratto billed $150 an hour for overtime he never worked, including regularly claiming more than 12 hours of work on Saturdays and Sundays during the second half of 2021.

Contractors working on the school construction project paid Gratto based on the fraudulent timesheets and were subsequently reimbursed by the district. Gratto then withdrew cash from his bank account and delivered the kickbacks to Mahmoud, usually leaving the money inside Mahmoud’s unlocked school vehicle, prosecutors said.

Both men were indicted in May 2026. The status of the charges against Mahmoud remains unclear. His attorney, Stephen McCarthy, did not respond to a request for comment.

Gratto’s attorney, Timothy Donohue, also did not respond to a request for comment.

As part of his plea agreement, Gratto agreed to forfeit $156,000. He faces up to 10 years in prison and a $25,000 fine when he is sentenced on March 4, 2027.