Former Hillsborough Township School District Business Administrator and Co-Worker Indicted in Kickback Scheme

NEWARK, N.J. - A federal grand jury returned an Indictment on Friday charging the former Business Administrator of the Hillsborough Township School District ("HTSD") in connection with an overtime fraud and kickback scheme, United States Attorney Robert Frazer announced.

According to the Indictment, Aiman Mahmoud, 56, who served as the Business Administrator for the HTSD from 2008 through the end of 2021, accepted tens of thousands of dollars in cash kickbacks in connection with a multi-million dollar project that aimed to upgrade existing school facilities as well as to construct a new school building that had been greenlighted by a 2019 referendum. To oversee aspects of the project including safety monitoring, Mahmoud arranged for Kenneth Gratto, 54, to be appointed as the site supervisor/owner's representative to assist two companies involved in carrying out the construction project.

The Indictment also alleges that shortly after Gratto was hired, Gratto agreed to provide substantial cash kickbacks to Mahmoud in exchange for Mahmoud's agreement to approve Gratto's time sheets which substantially exaggerated the number of overtime hours that Gratto had worked on behalf of the HTSD. After receiving his paychecks from the companies involved - who were in turn reimbursed by the HTSD for those amounts - Gratto would deposit the checks, withdraw cash in the amount of the intended kickback, and deliver that cash in envelopes at locations of Mahmoud's choosing, typically, within Mahmoud's unlocked school vehicle. Mahmoud is alleged to have taken at least approximately $70,000 in kickbacks from Gratto.

The six-count Indictment charges Mahmoud and Gratto with conspiring to embezzle, steal, and obtain by fraud funds belonging to and under the care, custody and control of the HTSD, contrary to Title 18, United States Code, Section 666(a)(1)(A), in violation of Title 18, United States Code, Section 371. The maximum term of imprisonment for this offense is five years' imprisonment and a $250,000 fine. Each defendant is also charged individually with embezzling, stealing and obtaining by fraud those same funds belonging to and under the care custody and control of the HTSD, in violation of Title 18, United States Code, Section 666(a)(1)(A). Those charges carry a maximum term of imprisonment of 10 years and a maximum fine of $250,000. In addition, the two defendants are charged with conspiring to commit extortion under color of official right, in violation of Title 18, United States Code, Section 1951(a). Both Mahmoud and Gratto are individually charged with extortion under color of official right, in violation of Title 18, United States Code, Section 1951(a) and 2. These latter three charges all carry a maximum term of imprisonment of 20 years and a maximum fine of $250,000.

U.S. Attorney Frazer credited agents of the Federal Bureau of Investigation under the direction of Special Agent in Charge Stefanie Roddy in Newark; the Department of Homeland Security, Homeland Security Investigations, under the direction of Acting Special Agent in Charge Spiros Karabinas; and the Somerset County Prosecutor's Office, under the direction of Prosecutor John P. McDonald, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorneys Mark J. McCarren of the U.S. Attorney's Office's Special Prosecutions Division.

The charges and allegations contained in the Indictments are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

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Defense counsel:

Stephen G. McCarthy, Esq., New York, NY (for defendant Mahmoud).

Timothy Donahue, AFPD, Newark (for defendant Gratto).