MILAN — Domenico Dolce and Stefano Gabbana have always focused on fashion and style, not management.
This story first appeared in the November 13, 2013 issue of WWD. Subscribe Today.
So said the designers’ lawyer Massimo Dinoia in a 90-page appeal of their tax-related conviction, filed this week at Milan’s courthouse. At the same time, Armando Simbari, the lawyer who assists Dolce’s brother Alfonso, also presented his appeal in a 203-page document. Both lawyers requested full acquittal of their clients, who have always denied all charges. A date for the appeal trial, which will be presided over by prosecutors who are part of the Appeal Court, has not been set. Prosecutors Gaetano Ruta and Laura Pedio, who were in charge of the trial held over the course of last winter and spring, will not participate.
In June, Dolce and Gabbana, as well as four other defendants, were found guilty in the designers’ long-running tax evasion case. Judge Antonella Brambilla sentenced the designers and accountant Luciano Patelli to one year and eight months in jail plus legal expenses. Dolce’s brother Alfonso, general director Cristiana Ruella and finance director Giuseppe Minoni were sentenced to one year and four months in jail plus legal expenses. The designers were acquitted on the second count they were originally charged with, which concerned the valuation of the company and the taxes paid based on that valuation.
Dinoia argued in the appeal papers that Dolce and Gabbana “never managed, actually or legally, the Luxembourg-based Gado,” which Brambilla considers essentially a legal entity used to avoid higher corporate taxes in Italy. The designers had no management title within that firm, nor were they “directly or indirectly, involved in the activities of Gado,” wrote Dinoia. He stated that the designers deal with design and style alone, and only with “those issues that concern the image of the fashion house and the creation of products, while all that pertains to the commercial phase, such as the organization and the administration of the company structures concern other offices and individuals.”
Dinoia said the two designers were “light years away from the trading activities of products,” and were even farther away from the technical and legal aspects concerning the activities to protect their brands. “This not only since Gado was formed but from the first day the fashion house was founded,” he said.
Simbari said the direction the trial took was “a really sour morsel to digest.” The lawyer pointed to “enormous media pressure” and perhaps the “superficiality of the operators in treating the question.” He believed the case and the sentence were blurred by “prejudice,” restating that Gado was “effectively based and really operative since the first year” in Luxembourg.
In September, Brambilla issued her reasonings behind the guilty verdict, handed down in June, stating she believed Dolce and Gabbana were aware that the company they sold their brands to in 2004 was a fictitious entity.
The judge said that the only purpose in setting up a company such as Gado was “to transfer earnings derived by royalties in Luxembourg” and that they were effectively the “beneficiaries.”
There is little chance the designers and the other defendants will serve any jail time because the sentences are below the two-year minimum generally required in Italy to do so and because there are the conditions for a “conditional suspension” of the sentence.
Following investigations that began in 2008, initiated by the Guardia di Finanza, an Italian police force under the authority of the national minister of economy and finance, both designers were charged with alleged tax evasion related to the 2004 sale of the Dolce & Gabbana and D&G brands to Gado.