(Adds statement from Dolce and Gabbana's lawyers)
By Manuela D'Alessandro
MILAN, June 19 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
"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. "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
($1 = 0.7467 euros)
(Additional reporting By Isla Binnie,; writing by Jennifer
Clark,; editing by Giles Elgood, David Stamp and Leslie Gevirtz)