Dolce & Gabbana Founders Guilty Of Tax Evasion, Sentenced To Prison

By Staff  |  06/19/2013

Dolce & Gabbana founders, Domenico and Stefano

The founders of Italian fashion house Dolce & Gabbana, Domenico Dolce and Stefano Gabbana, have been found guilty on tax evasion charges ... and sentenced to prison time.

Following investigations that began in 2008, the designers were found guilty of failing to declare $268 million of income, which was generated through their Luxembourg-based holding company, Gado Srl, reports WWD.

Dolce and Gabbana were both sentenced to a suspended sentence of one year and eight months, and ordered to pay a penalty of about $670,000 to tax authorities.

The case dates back to 2004, when the pair sold off two of their main brands to Gado, which prosecutors allege was done to avoid declaring taxes on royalties of about €1 billion. Both deny the charges.

Despite the sentences, they are likely not to do jail time. According to the Wall Street Journal, Italian law allows for sentences of less than three years to be served with house arrest or community service. And, the designers have the right to appeal the verdict twice, likely delaying the process even further, possibly for years.