Dolce and Gabanna sentenced to nearly 2 years jail for tax evasion

[t-rex]

An Italian court on Wednesday sentenced fashion design duo Domenico Dolce and Stefano Gabbana to one year and eight months in prison for hiding hundreds of millions of euros from the tax authorities.

The designers, who are nearly as famous as the stars they dress, were not present and have denied the charges. Given the complexity and length of the appeals process, they are unlikely to spend any time in jail.

A company spokesman could not be reached for immediate comment.

The success of Dolce and Gabbana's sexy corset dresses and sharply-tailored suits favoured by celebrities like Kylie Minogue, Kate Moss and Bryan Ferry have earned them a glamorous lifestyle.

http://www.reuters.com/article/2013/06/19/us-dolcegabbana-verdict-idUSBRE95I10F20130619

 

[KateTheGreatest]

Holy smoke I always thought powerful people would only get probation ...
I wonder what this means for the brand.

 

[rougevalentino]

OMG wasn't expecting this. This is disastrous for the brand.
Just saw this:

Dolce and Gabbana have not yet given a public comment on the sentence and are likely to appeal the verdict. They are said to be unlikely to go to jail any time soon.

http://www.bbc.co.uk/news/business-22977174

 

[LabelWhore4]

Tragic.

I'm not familiar with the Italian legal system, but will they seriously have a chance of serving their whole sentence?

 

[EvaH]

I really don't get it.. If it was anyone not famous people would say "good for the authority on catching them!" Most influential people, especially politicians see they career vanish for those kind of fraud.
I sure hope they will lose and serve their sentence. I never got the point of not wanting to pay tax, especially for people who earn a comfortable wage..

 

[Nymphaea]

I never got the point of not wanting to pay tax, especially for people who earn a comfortable wage..

I agree. The more people earn, the less eager they're paying taxes.

 

[yesitsdagny]

I'm not trying to justify Domenico's and Stefano's behavior, they do earn lots of money, that's for sure and paying the taxes is every citizen's duty.. but still. I'm deeply saddened by these news. 20 months is a long time, in my country many people who have done much worse things will never expect such sentence. It sure will affect the brand, they will miss at least three seasons.
It seems that we get those horrible news too often these days, fashion world has been really shaken up.

 

[GERGIN]

They're supposed to be opening a location in Toronto...I suppose they are leaving the work to their design team... So confused, yet amused.

 

[Marc10]

They should be in jail for making the same damn collection since 2009 tbh.

 

[MulletProof]

So confused, yet amused.

 

[lucy92]

it is a suspended sentence, so they won't be going to prison. they have to exhaust the appeals process which will take years.

the italian judicial system is a joke.

 

[5 8 6]

They should be in jail for making the same damn collection since 2009 tbh.

Best comment ever.

 

[alienobserver]

They should be in jail for making the same damn collection since 2009 tbh.

 

[TREVOFASHIONISTO]

i know this is bad but i am hoping they get some inspiration and go back to designing real collections

 

[YoninahAliza]

I really don't get it.. If it was anyone not famous people would say "good for the authority on catching them!" Most influential people, especially politicians see they career vanish for those kind of fraud.
I sure hope they will lose and serve their sentence. I never got the point of not wanting to pay tax, especially for people who earn a comfortable wage..

I feel the same way EvaH, I've never understood why people avoid paying taxes. Taxes are a natural part of being a citizen in Italy (in the US, etc... pretty much anywhere), it is to be expected. It's not like they get a bill at the end of the year and go, "Whats this??? We weren't told about this!" Everyone pays taxes and those taxes go to supporting the governments infrastructure. Do rich people not have good accountants? Because if middle class and lower income people can pay their taxes then surely the wealthy can too.

Perhaps this is harsh but I do not feel much pity for these two, clearly they broke the law, and when this happens repercussions ought to occur. Honestly, it bugs me so much when wealthy people get off scot free in tax situations (or in other events where the law was broken), they are no more special then the rest of us, therefore they should be given the same punishment. Of course this could be bad for the company but perhaps Dolce & Gabbana should have thought about that before trying to avoid paying taxes.

 

[Psylocke]

^Great post, YoninahAliza. I agree entirely. It's ridiculous how many famous and wealthy people do this. And they will end up spending so much money for a good lawyer in those cases, so what's the point, the risk of being caught is huge. Also, "hundreds of millions of euros", that is insaaaane, did they not pay any taxes at all during all these years?? I can understand wealthy people moving to states where taxes are lower and all that, but living in your home country and profiting from its infrastructure while not contributing to it like everyone else, that's idiotic. This whole things makes them even less likable

 

[VogueDisciple93]

This isn't just a couple millions in back taxes, this is €416 million(!), roughly $540 million. They didn't just forget to pay over the years, they took strategic steps to AVOID paying - selling the company to Luxembourg-based holding company Gado Srl. to circumference Italy's corporate taxes. This was premeditated and calculated. IF they serve the 20 months they got off too lightly.

 

[rougevalentino]

This isn't just a couple millions in back taxes, this is €416 million(!), roughly $540 million. They didn't just forget to pay over the years, they took strategic steps to AVOID paying - selling the company to Luxembourg-based holding company Gado Srl. to circumference Italy's corporate taxes. This was premeditated and calculated. IF they serve the 20 months they got off too lightly.

Very true. Tax evasion is tax evasion and it's not justifiable because of who the person avoiding paying the tax is. Hopefully this sends a message out to other public figures and businesses who have been doing similar that there are consequences.

 

[LagerfeldBoy]

Should I expect Naomi opening the show in an embellished orange jumpsuit, strutting that damn runway for Spring/Summer 2016?

 

[Selfportraitgrl]

Italian designers Dolce and Gabbana convicted of tax evasion

By Manuela D'Alessandro
MILAN | Wed Jun 19, 2013 5:39pm EDT

(Reuters) - 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 defense 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 favored 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. "Gado is 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."

Dolce and Gabbana's three lawyers said in a statement they were "frankly stunned" by the verdict and were "certain that that it will be overturned on appeal."

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)

reuters