MILAN — Judge Antonella Brambilla presided over an eight-hour hearing Wednesday as witnesses called by prosecutors Laura Pedio and Gaetano Ruta took the stand in the ongoing trial of Domenico Dolce and Stefano Gabbana, who are charged with omitted and unfaithful earnings declarations. The defendants have denied the charges.
Of note was the testimony of Marco Tanzi Marrotti, an executive of PricewaterhouseCoopers, the consultancy tapped by Dolce and Gabbana to set a price for their brands in spring 2003. “I was told that the designers were looking at the possibility of publicly listing their company,” said Tanzi Marrotti, explaining that an initial public offering would have required the brands to be “brought back into the group,” and controlled by a company rather than two individuals.
Based on a business plan for the 2004-2007 period, calculations of growing royalties and the company’s latest revenues, the consultancy pegged the value of the Dolce & Gabbana and D&G brands at 360 million euros, or $484.4 million at current exchange.
This amount and the fact that it takes into consideration Italy’s tax rate, standing at about 37.5 percent at the time, took center stage for most of Wednesday’s hearing. Questions from prosecutors and the lawyers for the defendants — who include managing director and board member Cristiana Ruella and Dolce’s brother and board member Alfonso Dolce, both once again present at the hearing — revolved around the consultancy’s choice of Italy’s tax rate in the evaluation of the brand, as well as the expected growth of royalties.
Mario Ambrosetti, a PricewaterhouseCoopers corporate finance director, remembered that the possibility of setting up a company in Luxembourg emerged at the time, “although it was not a definitive decision.” According to the tax police calculations, which took into account lower tax charges in Luxembourg, the value of the brands was estimated at 1.1 billion euros, or $1.4 billion. Prosecutors underscored that “the value of the brand is inversely proportional to the fiscal weight,” or tax.
The first Dolce & Gabbana employee took the stand on Wednesday. Maria Grazia Bergomi, employed by the firm since 2001 and responsible for the intellectual property of the brands, relocated to Luxembourg in 2005 to work for Gado Sarl, the designers’ holding company in that country, which the tax police consider a legal entity used to avoid higher corporate taxes in Italy. Bergomi, who reported to Ruella, lived in Luxembourg until December 2006, when she returned to Milan. She was the only Dolce & Gabbana employee in that country, and was succeeded by Claudia Bertinetti. In her job, Bergomi was assisted by Alter Domus, a Luxembourg-based agency that helped provide services. Dealing with lawyers, investigators and anticounterfeit experts, Bergomi registered, controlled and “maintained alive” about 1,600 brands for the group in more than 80 countries around the world. The defendants’ lawyers pointed to lengthy and laborious procedures connected to the protection of the brands that a transfer to Luxembourg entailed.
“It took six months to just initiate these procedures in 2004,” said Bergomi.
To further fuel the concept that Gado was not devised as a screen, the defendants’ lawyers produced paperwork including a job description to seek a successor for Bergomi and the latter’s rent contract in Luxembourg.
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye