Fashion designers Domenico Dolce and Stefano Gabbana were handed a 20-month suspended prison sentence and a heavy fine on Wednesday for hiding hundreds of millions of euros from the Italian tax authorities.
The design duo, who are nearly as famous as the stars they dress, were not present in court in Milan and will lodge an appeal against their conviction on charges that they have always denied.
"We will read the reasons for the verdict, and we will appeal," Massimo Dinoia, one of the pair's defence lawyers, said after the hearing.
Public
prosecutor Gaetano Ruta had asked for a two-and-a-half year jail
term. However, the two designers will have to pay 500,000 euros as a first
instalment of a fine that could reach 10 million euros ($13.4 million).
The
judge acquitted the pair of charges that they had filed inaccurate tax returns.
The
success of Dolce and Gabbana’s sexy corset dresses and sharply tailored suits
favoured by celebrities such as Kylie Minogue, Kate Moss and Bryan
Ferry have earned them a glamorous lifestyle. In 2009, they hosted popstar Madonna,
a friend and client, for her birthday at their villa perched above the chic Mediterranean resort
of Portofino.
The
case involves an investigation that began in 2008, when authorities tried to
crack down on tax evasion as the financial crisis began to bite. But the Dolce
and Gabbana inquiry is one of the few high-profile cases to come to trial so
far.
The
judge ruled that the pair sold their brand to Luxembourg-based holding
company Gado in 2004 to avoid declaring taxes on royalties of about 1
billion euros ($1.3 billion).
Public
prosecutor Laura Pedio told the court in her closing arguments that
the designers were “well aware that they would reap a tax advantage from
this transaction.”
Gado is
nothing but a shell company that took no administrative or financial decisions,
said Pedio. “Gadois a radio relay station,” she said. “The
orders originated in Milan, and bounced from Luxembourg back to the
Milan offices where the decisions regarding the brands were made.”
The designers still
risk a possible tax bill of more than 400 million euros as a result of the
case, their lawyers said, which could impact their fashion house.
“We
are afraid to even imagine what the social and economic consequences of such a
move would be,” said their lawyers.
The
pair’s flamboyant designs are inspired by the island of Sicily, where
Dolce was born in 1958. They showed their first collection in 1985 in Milan,
the home city of Gabbana who is now 50. The brand took hold internationally in
the 1990s and global revenues hit just under 1.5 billion euros in 2011.
The
designers have always said they are innocent. “Everyone knows that we
haven’t done anything,” Gabbana tweeted in June 2012 after the trial was
ordered.
Gabbana;s immediate
reaction on Wednesday was to tweet a photograph of the branch of a citrus tree,
a symbol of Sicily which is the duo’s signature, just seconds after
the verdict was announced. A strand #freedolceandgabbana also appeared on Twitter.
($1 = 0.7467 euros) (Additional reporting By Isla Binnie,; writing by Jennifer
Clark,; editing by Giles Elgood, David Stamp and Leslie Gevirtz)
