Couple who stole $1.3M from Georgians with disabilities sentenced to prison time in inside job

It was an inside job -- a state employee and her husband stealing money intended to help people with diseases like cancer and muscular dystrophy.

When Kevin Gregory spoke during his sentencing in federal court on Wednesday, he told the judge “It seemed like a good idea at the time.”

That good idea was a four-year scheme to steal money that was supposed to help Georgians with disabilities get jobs.

Gregory wore a Detroit Lions jersey to his sentencing Wednesday. He now admits he was part of a husband-and-wife team that stole more than $1.3 million intended to pay for college for Georgians with disabilities.

“When people take those funds from those people it’s a particularly heinous type of crime,” said Keith Kabrhel, FBI special agent who led the investigation.

Federal prosecutors say Gregory’s then-wife Karen Gregory, now Karen Lyke, worked on the inside as a counselor at the Georgia Vocational Rehabilitation Agency approving for four years the fake students that Kevin Gregory created fake IDs and bogus college transcripts for.

More than 250 checks were issued to 13 friends and family of the Gregorys -- some who were in on the scheme and some who were not.

Court papers say the fake records Gregory would create “claimed that the fake students had disabilities or illnesses like AIDS, cancer, psychosocial impairments, or muscular dystrophy.”


“They were taking, in some cases, the legitimate information for people who should be in the system to receive the money taking their special needs and diagnosis and information and replacing with other people’s names and pictures, creating fake IDs and Social Security cards,” Kabrhel said.

While fighting for a lighter sentence Wednesday, Gregory’s attorney argued that this wasn’t a sophisticated scheme because he only used Microsoft Paint to create the fake documents.

But judge JP Boulee sentenced Gregory to 51 months in federal prison. Lyke plead guilty last month and was sentenced to 60 months.

“It was a full-time job actually working for the state, but then it was also a full-time job defrauding the state and the people who should be receiving the money,” Kabrhel said.

Boulee revealed in court Wednesday that Lyke, who had just lost an appeal to her sentence last week, died at some point in the past few days before going into federal custody. We do not know the details of that.

Gregory and Lyke were both ordered to pay back the $1.3 million they stole.