Attorney General James Secures $4.5 Million from Travel Agencies for Scheme to Avoid Taxes

NEW YORK – New York Attorney General Letitia James today secured $4.5 million from travel booking company Fareportal, Inc. (Fareportal) and three of its affiliated travel companies – WK Travel, Inc., Jen NY, Inc., and Tripmama, Inc. – for failing to pay over a million dollars in state corporate taxes. An investigation by the Office of the Attorney General (OAG) found that the companies violated the tax provisions of the New York False Claims Act by concealing millions of dollars of taxable dividends from the state’s tax authorities. The companies intentionally misclassified those dividends as “management fees” paid to a separate company, Magic Travel, LLC (Magic Travel), which had the same owner as the travel companies. The travel companies then deducted the sham fees from their income to make it appear that their taxable profits were far lower than they actually were, which allowed them to avoid paying more than a million dollars in taxes.  

“New Yorkers’ taxes help support our roads, trains, and airports – the same infrastructure that travel agencies like Fareportal depend on for their success,” said Attorney General James. “Fareportal and its affiliates operated a brazen scheme to avoid paying taxes, and now they are being held accountable. My office has zero tolerance for tax dodgers, and we will continue to use every tool at our disposal to ensure all New Yorkers pay their fair share.”

From 2007 to 2012, Fareportal and its affiliated companies avoided paying over a million dollars in New York state corporate taxes by misclassifying dividend payments as management fees. The companies paid a portion of their profits to Magic Travel as management fees, and then deducted these payments as expenses, reducing their tax burden. But the OAG’s investigation revealed that the fees were grossly inflated – Magic Travel had no employees and merely held the personal investments of the travel companies’ owner, who already worked as CEO of Fareportal. In total, the companies paid approximately $145 million in management fees to Magic Travel over the five-year period.

Under state and federal tax law, most of the management fee payments to Magic Travel were in fact dividends distributed to the owner, which the companies should have paid far more taxes on than they did. The companies and their owner were aware of this, but continued to take the inflated tax deductions despite explicit warnings from outside accountants that the fees could be classified as dividend payments and result in the companies being liable for millions of dollars in federal, state, and local taxes.

The investigation began after a whistleblower filed a qui tam action under the New York False Claims Act. The New York False Claims Act allows private individuals to file civil actions on behalf of the government and to share in any recovery. Under the settlement, Fareportal and its affiliated companies will pay $4.5 million, with approximately $1 million going to the whistleblower. 

Attorney General James previously secured $2.6 million from Fareportal in an unrelated case involving its deceptive use of “dark pattern” marketing practices to manipulate customers by creating a false sense of urgency around ticket and hotel room availability.

Attorney General James has consistently taken action to hold businesses and their owners accountable for tax evasion. In February, Attorney General James secured $4.7 million from two New York City truck rental companies and their accountant for a decade-long tax evasion scheme. In September 2025, Attorney General James announced the indictment of top executives of a strip club company for their roles in a multimillion dollar criminal tax fraud and bribery scheme. In November 2024, Attorney General James secured more than $6 million from Sotheby’s for using fraudulent methods to secure tax breaks for its clients on tens of millions of dollars of art purchases. In September 2022, Attorney General James secured $50 million from two companies for selling cigarettes without paying the required state taxes.

The matter was led by Assistant Attorney General Susan Jacquemot of the Taxpayer Protection Bureau, with the assistance of Legal Support Analyst Bianca LaVeglia. The Taxpayer Protection Bureau is led by Bureau Chief Thomas Teige Carroll and Deputy Bureau Chief Scott J. Spiegelman and is a part of the Division for Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and overseen by First Deputy Attorney General Jennifer Levy.