MILAN — The Italian tax authorities have taken aim at another high-profile fashion family: the Marzottos.

This story first appeared in the November 6, 2012 issue of WWD. Subscribe Today.


The allegations involve the family’s association with the sale of Valentino Fashion Group to private equity fund Permira in 2007 and include former Valentino chairman Matteo Marzotto, among others. The Marzottos are the latest in a long line of Italian fashion industry figures to be targeted by the country’s tax police, ranging from Giorgio Armani to Valentino Garavani and Giancarlo Giammetti to, most recently, Domenico Dolce and Stefano Gabbana. Almost all the cases have subsequently been dismissed, although the Dolce and Gabbana one is ongoing.

A Milan branch of the Guardia di Finanza, an Italian police force under the authority of the national Minister of Economy, has confiscated assets, including land and real estate properties, worth more than 65 million euros, or $83.4 million at current exchange, owned by a number of Marzotto family members. The properties include villas in the luxury mountain resort Cortina d’Ampezzo; apartments in Milan and Rome, and a castle in Trissino, near Vicenza and not far from the Marzotto headquarters in Italy’s Valdagno.

As part of a probe initiated by prosecutor Laura Pedio, who has also been heading up the Dolce and Gabbana case, and Gaetano Ruta, 13 individuals are being investigated for alleged omission of earnings and assets declaration. In addition to Matteo, other Marzottos being accused are Vittorio, Maria Rosaria, Cristiana, Diamante and Margherita. Also charged are Andrea, Isabella and Rosanna Donà dalle Rose, Barth Zech, Pierre Cladmi, Ferdinando Businaro and real estate entrepreneur Massimo Caputi. The Donà delle Rose is another Marzotto family branch.

Matteo Marzotto responded Monday evening, issuing a statement saying that he acknowledged the confiscation, but felt it was “opportune” to underscore that he did not hold operative roles in the company, in which he was a minority shareholder. “I believe, together with the other individuals involved, that I have always operated in the full respect of the law, so much so that this operation had been at the time communicated in all its details to the authorities of the Bourse and to the press,” said Marzotto. He concluded adding that he had “faith that a solution will shortly be found, and, to this end,” he had appointed “a pool of professionals” headed by one of Italy’s most notable fiscal lawyers, Victor Uckmar.

A well-placed legal source said “the hypothesis is that a foreign company allegedly based in Luxembourg was solely created for the sale of the Valentino brand to Permira,” and that taxes on the profit derived from the transaction were never paid in Italy. “The company was called ICG [International Capital Growth Sarl] and was closed after the sale,” said the source. “This allowed the accused to net a capital gain of 200 million euros [$256.7 million at current exchange], and elude the payment of over 65 million euros in taxes.”

The accusation is that ICG was an Italian company that should have paid taxes in Italy as it did not list headquarters in Luxembourg and was managed from Italy and managers resident in this country, said the source. The Guardia di Finanza said in a note that the financial holding was “formally and consciously set up in Luxembourg.”

In issuing the decree to sequester the assets, the judge in charge of the preliminary investigations, Gianfranco Criscione, motivated the confiscation with the fact that in May 2007, “the profit made by ICG through the sale of VFG was transferred to the Cayman Islands, including the part earned through the fiscal evasion.” The judge believes that there are elements leading to the “danger that the accused could transfer abroad at least a part of their assets,” or engage in other operations with the goal to evade paying their dues.

What the accused will decide to do next remains to be seen. “If they pay up, they will get their assets back and this will be behind them, or this could go to court,” said a legal source.

Permira acquired 29.6 percent of VFG from the Marzotto family’s ICG for 782.6 million euros, or $1 billion, in May 2007. Permira then took control of VFG with some members of the Marzotto family through Red & Black Lux Sarl, shelling out about $3.55 billion for the group, which included a majority stake in Hugo Boss — at the time Permira’s prime motivation for the deal.

In 1998, Garavani and his business partner, Giammetti, sold the company to the now-defunct Holding di Partecipazioni Industriali for $233 million, three times the house’s direct revenues. Valentino languished in the red under HdP, and Marzotto bought the designer company in 2002 for $210 million (including Valentino’s net debt of $179.2 million), putting the designer under contract. Marzotto, which started out as a woolen mill in 1836, made its first fashion foray when it bought Hugo Boss in 1991. In 2005, Marzotto spun off Valentino, a controlling stake in Hugo Boss and other clothing assets into the new VFG, listing it on the Milan Stock Exchange. Valentino was delisted in 2008.

In July, Mayhoola for Investments, an investment vehicle backed by a private investor group from Qatar, agreed to acquire VFG for around 700 million euros, or $858 million, from Red & Black Lux.