Calabasas CA
5-22-2025 8:44pm

Covid Tax-Benefit-Scheme Fraudster Sentenced

May 17, 2021, the COVID-19 Fraud Enforcement Task Force was established to marshal the resources of the DOJ to enhance efforts to combat and prevent pandemic-related fraud.

Kevin J. Gregory, 57, was sentenced by United States District Judge Josephine L. Staton, who also ordered him to pay $2,769,173 in restitution. Gregory, who has been in federal custody since May 2023, pleaded guilty on January 17 to one count of making false claims to the IRS.

  • From November 2020 to April 2022, Gregory made false claims to the IRS for the payment of nearly $65.3 million in tax refunds for a purported Beverly Hills-based farming-and-transportation company named Elijah USA Farm Holdings.
    • January 2022, Gregory made a false claim to the IRS for the payment of a tax refund in the amount of $23,877,620, which he submitted as part of Elijah Farm’s quarterly federal tax return. 
    • Gregory claimed Elijah Farm 
      • Employed 33 people
      • Paid nearly $1.6 million in quarterly wages
      • Had deposited nearly $18 million in federal taxes
      • Was entitled to nearly $6.5 million in COVID-relief tax credits.
    • Gregory knew that Elijah Farm 
      • Employed nobody
      • Paid wages to no one
      • Had not made federal tax deposits to the IRS in the amounts stated on his tax return.
  • The IRS issued a portion of the refunds Gregory claimed, and Gregory used a significant portion – more than $2.7 million – for personal expenses.

IRS Criminal Investigation investigated this matter. Assistant United States Attorney Kristen A. Williams of the Major Frauds Section prosecuted this case.

 Central District of California | Hollywood Man Sentenced to Nearly 5 Years in Prison for Fraudulently Seeking Millions of Dollars in COVID Tax Breaks | United States Department of Justice

In response to the COVID-19 pandemic and its economic impact, Congress authorized

  • An employee retention tax credit that a small business could use to reduce the employment tax it owed to the IRS, also known as the “employee retention credit.”
    • To qualify, the business had to have been in operation in 2020 and to have experienced at least a partial suspension of its operations because of a government order related to COVID-19 (for example, an order limiting commerce, group meetings or travel) or a significant decline in profits.
    • The credit was an amount equal to a set percentage of the wages that the business paid to its employees during the relevant time period, subject to a maximum amount.
  • The IRS to give a credit against employment taxes to reimburse businesses for the wages paid to employees who were on sick or family leave and could not work because of COVID-19. 
    • This “paid sick and family leave credit” was equal to the wages the business paid the employees during the sick or family leave, also subject to a maximum amount.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. More information on the Justice Department’s response to the pandemic may be found here.

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