In the still ongoing Dolce & Gabbana tax evasion proceedings, Judge Laura Cariati has spoken out about the case. From the beginning (aka since the initial trial and through their appeal to a higher court in Italy) Domenico Dolce and Stefano Gabbana have disclaimed liability stemming from an investigation that began in 2008 when Italian authorities stepped up their fight against tax evasion. In a verdict issued last June, the designers were convicted of hiding hundreds of millions of euros from Italian tax authorities.
Specifically, the lower court held that Dolce and Gabbana, as well as other company execs, used Luxembourg holding company Gado to avoid paying taxes on royalties of about 1 billion euros ($1.38 billion). The court of appeals, under Judge Laura Cariati, ruled similarly. Cariati has since spoken out about the designers' claims that they are innocent, as they are completely removed from the business aspect of the brand, saying they not only knew about the failure to pay large sums of taxed but that the move was "intentional."
A quick refresher: The design duo, along with several others, including their accountant, were charged with tax evasion, following the 2004 sale of the Dolce & Gabbana and D&G brands to the designers' Luxembourg-based holding company, Gado Srl. The Italian tax police believe that Gado was essentially a legal entity used to avoid Italy's higher corporate taxes, and thus, launched an investigation. According to the judges in this case, Gado may only be "ficticiously" based in Luxembourg in attempts to avoid paying Italian taxes. The lower court, which ruled in the case last year, issued a statement, detailing the designers' guilt and involvement in the tax evasion scheme following its guilty verdict. (See that here).
On the heels of issuing the rule against the design duo in April, Judge Cariati said: “It is not at all believable that the designers, once made aware of the project [to avoid Italian taxes], could feel they were operating legally." Considering that she oversaw a ruling that convicted Dolce and Gabbana of tax evasion, this is hardly a surprising move. What is maybe more surprising is that Dolce and Gabbana plan to appeal their case yet again, this time to the Cassazione, Italy's highest court. More to come ...