News
07/01/26 | Firm News
Kirby McInerney and Lieff Cabraser Announce $4.5 Million Settlement of New York False Claims Act Tax Case Against Online Travel Companies
NEW YORK—Kirby McInerney LLP and Lieff Cabraser Heimann & Bernstein LLP announce the settlement of a case they brought on behalf of a whistleblower client against online travel companies Fareportal, Inc. (brand name “CheapOair”) and its affiliated companies Jen N.Y., Inc. (brand name “FareBuzz”), WK Travel, Inc. (brand name “OneTravel”), Travelong, Inc.
On May 11, 2026, a settlement was reached among the New York Office of the Attorney General, the defendants, and the whistleblower, under which the defendants agreed to settle the case and pay $4.5 million. Of that amount, 23% of the government recovery, or $1.035 million, has been paid as a whistleblower award, representing one of the highest percentage whistleblower awards ever received under the New York False Claims Act. The case was under a court-ordered seal until recently.
The case was brought in 2018 raising allegations that the defendants violated New York tax laws by taking false deductions to lower their New York tax liabilities.
Specifically, the whistleblower alleged that Fareportal and its affiliated companies paid non-deductible dividends to Fareportal’s owner and founder, but disguised the dividends as deductible payments for purported consulting services, and then deducted them. As alleged, the payments for the purported consulting services went to a limited liability company, Magic Travel International, LLC, which was owned and controlled by Fareportal’s owner/founder, and which had no employees and had not performed services for Fareportal and its affiliates. The whistleblower further alleged that the amounts paid as consulting fees tracked the corporate profits that were available to be paid to the owner. In addition, the whistleblower alleged that concerns were raised numerous times about the payment of such “disguised dividends” by internal personnel, by outside experts, and by potential investors, but they were ignored.
“The settlement demonstrates the important role played by whistleblowers with concrete evidence of tax frauds in helping New York identify and pursue schemes that essentially take money out of the pockets of citizens who follow the rules and pay their taxes,” said Randall M. Fox of Kirby McInerney LLP. “We appreciate the work of the New York Attorney General’s Office in investigating and resolving the matter.”
Rachel Geman of Lieff Cabraser Heimann & Bernstein LLP added: “Tax whistleblower cases are often uniquely difficult to uncover because the relevant conduct occurs behind closed corporate and accounting structures. This result reflects the value of insiders coming forward with detailed information about alleged misconduct.”
Mr. Fox and Ms. Geman handled the case and, along with their whistleblower client, provided substantial assistance to the Office of the Attorney General in its pursuit of the case.
Kirby McInerney and Lieff Cabraser extend their gratitude to their client and to New York Attorney General Letitia James and the New York Attorney General’s Taxpayer Protection Bureau for pursuing this case. In particular, it thanks Assistant Attorney General Susan Jacquemot who spearheaded the settlement, and former Assistant Attorney General David Farber who conducted the investigation. A copy of the Attorney General’s press release can be found here.
New York is one of the few states that reward whistleblowers under its False Claims Act for reporting on state and local tax law violations. Since New York began permitting such claims in 2010, it has recovered over $680 million in New York False Claims Act tax cases.
If you are aware of violations that have victimized the government or investors that might be addressed by a whistleblower program, please contact Kirby McInerney LLP partner Randall Fox at rfox@kmllp.com or Lieff Cabraser Partner Rachel German at rgeman@lchb.com to discuss your rights or interests with respect to these matters without any cost to you.
About Kirby McInerney LLP
Kirby McInerney LLP is a New York-based plaintiffs’ law firm concentrating in whistleblower litigation, securities litigation, consumer protection, antitrust, and complex commercial litigation.
About Lieff Cabraser Heimann & Bernstein LLP
Lieff Cabraser Heimann & Bernstein LLP is a nationally recognized plaintiffs’ law firm committed to advancing the rights of whistleblowers, consumers, employees, and investors through complex litigation and public-interest advocacy.
On May 11, 2026, a settlement was reached among the New York Office of the Attorney General, the defendants, and the whistleblower, under which the defendants agreed to settle the case and pay $4.5 million. Of that amount, 23% of the government recovery, or $1.035 million, has been paid as a whistleblower award, representing one of the highest percentage whistleblower awards ever received under the New York False Claims Act. The case was under a court-ordered seal until recently.
The case was brought in 2018 raising allegations that the defendants violated New York tax laws by taking false deductions to lower their New York tax liabilities.
Specifically, the whistleblower alleged that Fareportal and its affiliated companies paid non-deductible dividends to Fareportal’s owner and founder, but disguised the dividends as deductible payments for purported consulting services, and then deducted them. As alleged, the payments for the purported consulting services went to a limited liability company, Magic Travel International, LLC, which was owned and controlled by Fareportal’s owner/founder, and which had no employees and had not performed services for Fareportal and its affiliates. The whistleblower further alleged that the amounts paid as consulting fees tracked the corporate profits that were available to be paid to the owner. In addition, the whistleblower alleged that concerns were raised numerous times about the payment of such “disguised dividends” by internal personnel, by outside experts, and by potential investors, but they were ignored.
“The settlement demonstrates the important role played by whistleblowers with concrete evidence of tax frauds in helping New York identify and pursue schemes that essentially take money out of the pockets of citizens who follow the rules and pay their taxes,” said Randall M. Fox of Kirby McInerney LLP. “We appreciate the work of the New York Attorney General’s Office in investigating and resolving the matter.”
Rachel Geman of Lieff Cabraser Heimann & Bernstein LLP added: “Tax whistleblower cases are often uniquely difficult to uncover because the relevant conduct occurs behind closed corporate and accounting structures. This result reflects the value of insiders coming forward with detailed information about alleged misconduct.”
Mr. Fox and Ms. Geman handled the case and, along with their whistleblower client, provided substantial assistance to the Office of the Attorney General in its pursuit of the case.
Kirby McInerney and Lieff Cabraser extend their gratitude to their client and to New York Attorney General Letitia James and the New York Attorney General’s Taxpayer Protection Bureau for pursuing this case. In particular, it thanks Assistant Attorney General Susan Jacquemot who spearheaded the settlement, and former Assistant Attorney General David Farber who conducted the investigation. A copy of the Attorney General’s press release can be found here.
New York is one of the few states that reward whistleblowers under its False Claims Act for reporting on state and local tax law violations. Since New York began permitting such claims in 2010, it has recovered over $680 million in New York False Claims Act tax cases.
If you are aware of violations that have victimized the government or investors that might be addressed by a whistleblower program, please contact Kirby McInerney LLP partner Randall Fox at rfox@kmllp.com or Lieff Cabraser Partner Rachel German at rgeman@lchb.com to discuss your rights or interests with respect to these matters without any cost to you.
About Kirby McInerney LLP
Kirby McInerney LLP is a New York-based plaintiffs’ law firm concentrating in whistleblower litigation, securities litigation, consumer protection, antitrust, and complex commercial litigation.
About Lieff Cabraser Heimann & Bernstein LLP
Lieff Cabraser Heimann & Bernstein LLP is a nationally recognized plaintiffs’ law firm committed to advancing the rights of whistleblowers, consumers, employees, and investors through complex litigation and public-interest advocacy.
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