Tell him the truth? That some Mom made up the story to sell her crappy elf figurines? Then find out who the money grubing little BI is and tell her that manipulating kids beliefs to make crack and beer money is pretty G'damn low...
if it were my kid I'd be sorely tempted to have him selling "special elf cookies" back to the kids, to bribe the elves, that way they wouldn't have to be good.
