Users can be deleted by running the following command:
sudo deletesftpuser <username>
This will delete any local files in the user's home directory, so make sure you make a back up first.
Note: Deleting a user will not delete the data stored on S3. However, the user could have SSE-C custom encryption keys stored in /home/username/.sftpgateway/ that may have been used to encrypt individual S3 files.