A Los Angeles man has admitted to making false claims to the Internal Revenue Service (IRS) in a scheme to fraudulently obtain over $65 million in COVID-related tax credits. Kevin J. Gregory, 57, pleaded guilty to one count of making false claims against the IRS and has been in federal custody since May 2023.
The case involves the misuse of an employee retention tax credit authorized by Congress during the COVID-19 pandemic. This credit was designed to help small businesses reduce employment taxes if they experienced operational disruptions due to government orders or significant profit declines. Additionally, a paid sick and family leave credit was available for wages paid to employees unable to work due to COVID-19.
According to court documents, from November 2020 through April 2022, Gregory submitted false claims for nearly $65.4 million in tax refunds for a non-existent company named Elijah USA Farm Holdings, purportedly based in Beverly Hills. The IRS issued more than $2.7 million of these refunds, which Gregory used for personal expenses.
In January 2022, Gregory falsely claimed a tax refund of $23,877,620 as part of Elijah Farm's quarterly federal tax return. He reported that the company employed 33 people with nearly $1.6 million in quarterly wages and had deposited almost $18 million in federal taxes, qualifying for approximately $6.5 million in COVID-relief tax credits. In reality, Elijah Farm had no employees and made no such deposits.
United States District Judge Josephine L. Staton has scheduled Gregory's sentencing hearing for May 16, where he could face up to five years in federal prison.
The investigation was conducted by IRS Criminal Investigation with prosecution led by Assistant United States Attorney Valerie L. Makarewicz of the Major Frauds Section.
The case is part of broader efforts by the Department of Justice’s COVID-19 Fraud Enforcement Task Force established on May 17, 2021. This task force aims to combat pandemic-related fraud by enhancing investigative efforts and supporting agencies administering relief programs.
Individuals with information about attempted fraud related to COVID-19 can report it through the Department of Justice’s National Center for Disaster Fraud Hotline at (866) 720-5721 or via their online complaint form.