Gregory was last seen by witnesses on January 4, 1987. According to eyewitness Janet Morgan DeBoer, Nicely and Steve Peavler got into an argument at her house. Peavley then shot Nicely, dragged him to Nicely's pickup truck, and drove away. Nicely's pickup was recovered near the Arkansas-Oklahoma border with a pool of blood on the floorboard of the truck, but no body. Peavler was arrested after Nicely's disappearance and charged with kidnapping and second-degree battery. He was acquitted of the kidnapping charge and found guilty of the battery charge.

During his trial, Peavler testified that he was driving Nicely to the hospital when Nicely regained consciousness and said he did not want to go to the hospital. Peavler then said that he drove to a property that Peavler owned so the two could talk out their differences. He said he left Nicely at the property and drove to a nearby store. When he returned to the property, Nicely was gone.

Nicely's mother, Barbara Nicely, believes that Gregory may be alive with amnesia, due to the fact that he had suffered "mental breakdowns" in the past after the death of his father and grandfather. Authorities believe that Nicely is no longer alive.