Hollywood Man Gets 5 Years for Filing Bogus Claims for COVID-Related Tax Credits

Kevin Gregory claimed employee-retention tax credits for a fake farming-and-transportation company in Beverly Hills.

The Los Angeles County Federal Courthouse in Los Angeles on Jan. 11, 2024. John Fredricks/The Epoch Times

A federal judge sentenced a Hollywood man to nearly five years in prison May 22 after he pleaded guilty to claiming more than $65 million in COVID-19 tax credits for a fictional farming business, according to the U.S. Attorney’s Office in Los Angeles.

Kevin J. Gregory, 57, was sentenced by U.S. District Judge Josephine Staton, who also ordered him to pay nearly $2.8 million in restitution.

Gregory pleaded guilty on Jan. 17 to one count of making false claims to the Internal Revenue Service (IRS). He has remained in federal custody since May 2023, according to prosecutors.

In March 2020, Congress authorized an employee retention tax credit in response to the COVID-19 shutdown and its economic impacts on businesses. The tax credit could be used by businesses to reduce the employment tax owed to the IRS.

The credit was designed to encourage businesses to keep paying their employees during the pandemic.

Any business, regardless of size, could qualify for the tax credit if it had been operating in 2020 and was at least partially suspended because of a government order related to the pandemic, or had seen a decline in revenue of more than 50 percent.

Qualifying businesses received 50 percent of up to $10,000 in wages paid by an employer between March 13 and Dec. 31, 2020, according to the U.S. Treasury Department.

Congress also authorized a “paid sick and family leave credit” during the pandemic that authorized the IRS to give a credit to businesses for wages paid to workers who were on sick or family leave and couldn’t work because of COVID-19.

According to federal prosecutors, Gregory made false claims to the IRS for the payment of nearly $65.3 million in tax refunds from November 2020 to April 2022.

The refunds were for a Beverly Hills-based farming-and-transportation company named Elijah USA Farm Holdings, which did not exist.

Federal prosecutors say the IRS issued a portion of the refunds Gregory claimed, and he used more than $2.7 million for personal expenses.

In January 2022, Gregory filed a false claim to the IRS for a tax refund in the amount of $23.8 million, which he submitted as part of Elijah Farm’s quarterly federal tax return, according to prosecutors.

He claimed in his filing that Elijah Farm employed 33 people, paid nearly $1.6 million in quarterly wages, and had deposited nearly $18 million in federal taxes.

“In fact, Gregory knew that Elijah Farm employed nobody and paid wages to no one and had not made federal tax deposits to the IRS in the amounts stated on his tax return,” the U.S. Attorney’s Office stated in a press release Thursday.

Gregory was arrested in 2023 by IRS special agents and charged in a federal grand jury indictment with 17 counts of making false claims to the IRS.

The statutory maximum sentence for the charges was five years in federal prison. Gregory was sentenced to 57 months in prison—just under the maximum.

The IRS’s criminal investigation unit handled the case, and Assistant U.S. Attorney Kristen Williams of the major frauds section prosecuted it.

Gregory could not be reached for comment.