The Italian tax police continue their aggressive prosecution of fashion industry designers and executives. The latest to be slapped with an indictment: former Valentino chairman Matteo Marzotto, his sister Diamante and three others (real estate entrepreneur Massimo Caputi; Bart Zech and Pierre Kladny, respectively administrator and president of the board of International Capital Growth ("ICG"), a firm the tax police believe to be a fictitious entity based in Luxembourg, created for the purpose of selling 29.9 percent of the Valentino group.), for alleged omission of earnings declaration and tax evasion of more than $93 million. According to WWD, a trial will take place in Milan either before the end of the year or in early 2014.
The allegations stem from the May 2007 sale of a percentage of the Valentino Fashion Group from the Marzotto family’s firm, ICG, to Permira, a private equity fund, for more than $1 billion. According to a WWD source, ICG, which is "allegedly based in Luxembourg was solely created for the sale of [29.6 percent of] the Valentino brand to Permira,” and that it was closed shortly thereafter. Permira then took control of VFG with some members of the Marzotto family, shelling out about $3.55 billion for the group. 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, where its executives resided. This allowed the accused to net a capital gain of $256.7 million, and elude the payment of more than $93 million in taxes, the police claim.
Eight ICG partners, including Vittorio Marzotto, opted for a plea bargain, in which a six-month jail sentence was converted into a fine. ICG paid about $75 million, to the Agenzia delle Entrate, Italy’s internal revenue service, this spring.
Marzotto joins the ranks of other prominent fashion figures, who have targeted by the Italian tax authorities, including: Giorgio Armani to Valentino founder Valentino Garavani and his business partner, Giancarlo Giammetti, to the Bulgari family. Almost all the cases were dismissed, although Dolce and Gabbana, the first Italian designers to actually be tried in court for tax evasion, were found guilty last month and sentenced to jail time.