Cavalli Guilty of Tax Evasion

A Florence court on Thursday found Roberto Cavalli guilty of tax evasion and sentenced him to 14 months in prison.

MILAN — A Florence court on Thursday found Roberto Cavalli guilty of tax evasion and sentenced him to 14 months in prison, but a technicality in Italian law will likely exempt him from actually serving jail time.

Tax authorities initially accused the designer in 2002, claiming Cavalli dodged fiscal responsibilities by booking about 5 billion lire, or $3.14 million at current exchange rates, of costs to restructure his luxurious Tuscan home as company expenses for the fiscal years 1996 through 2000.

Cavalli will appeal, according to a statement from his New York press office. Calling the judgment “unjustified,” it said Cavalli’s lack of criminal record and the fact the designer doesn’t need to start serving his sentence immediately, if ever, will facilitate an appeal.

“As [much as] it is possible to read the grounds for this entirely unjustified ruling, [Cavalli’s lawyers] will launch an immediate challenge,” the statement said. “The defense counsels are firmly convinced that the crime assumed on the part of the public prosecutor … [is] utterly groundless and that in the appeal procedure, Mr. Cavalli will, therefore, be acquitted in the fullest terms.”

A Cavalli spokeswoman said the designer was traveling and not in the courtroom for the verdict. Italian law allows a judge’s discretion in suspending a sentence of less than two years under the pretext that the convicted person won’t recommit the same crime.

The firm claims that Cavalli’s estate, which includes two swimming pools, a collection of animal-print rugs and centuries-old statues of the Madonna, also serves as the designer’s headquarters.

“It was amply proved that the expenses at issue pertained to the running of the company since the designer’s residence forms an integral part of his corporate business, in addition to serving as the company’s prestigious showroom, where events, fashion shows, displays, photographic services, etc., are held and provided,” the statement said.

The firm dismissed charges that Roberto Cavalli SpA booked the designer’s residential restructuring charges to the company through phony bills and receipts, saying the firm commissioned all of the work done on the house.

“The state has no more claims on Mr. Roberto Cavalli, since the Florentine designer has long since settled his position with the treasury in full, including from the tax standpoint,” the statement said.

This story first appeared in the March 24, 2006 issue of WWD.  Subscribe Today.

Cavalli’s lawyers, Alessandro Traversi and Massimo Dal Piaz, couldn’t be reached for comment.

In 2003, the designer rejected the plea bargain offer with the intention of proving his innocence.

Cavalli is not the first designer to battle Italian tax authorities. Tax evasion is rampant in Italy, where income tax rates can rise above 45 percent and under-the-table transactions are common.

Gianfranco Ferré, Santo Ver­sace, Mariuccia Mandelli of Kriz­ia and their business associates were indicted in July 1995 on charges of corruption and bribing tax police in return for swift, trouble-free audits. While they were originally found guilty, a higher court overturned the verdicts and found they were victims of extortion.

At that time, Giorgio Armani, Gerolamo Etro and Krizia chairman Aldo Pinto were also indicted on similar charges, but pleaded guilty in May 1996 before the trial began. They, too, said they were victims of extortion, but took plea bargains to end their cases as soon as possible.