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Fashion icons Dolce, Gabbana convicted in Italy of tax crime

By Livia Borghese and Greg Botelho, CNN
updated 11:39 AM EDT, Thu June 20, 2013
Stefano Gabbana, left, and Domenico Dolce are co-founders of one of the fashion world's most well-known and desired brands.
Stefano Gabbana, left, and Domenico Dolce are co-founders of one of the fashion world's most well-known and desired brands.
STORY HIGHLIGHTS
  • NEW: Defense lawyers: They were convicted on one accusation, not all
  • Domenico Dolce and Stefano Gabbana are sentenced in a Milan court
  • So, too, are four others associated with their upscale fashion company
  • The fashion luminaries' lawyer says their convictions will be appealed

(CNN) -- Fashion luminaries Domenico Dolce and Stefano Gabbana were sentenced to prison in Italy Wednesday for failing to pay 40.4 million euros in taxes to the Italian government, their lawyer and a prosecutor said.

"This time it was not the case like the invoice for car repair," prosecutor Laura Pedio said of the crime for which the fashion duo was convicted. "This time it's serious, complicated, sophisticated tax fraud crime."

Both men were sentenced to one year and eight months in prison and, in addition to what they owe in taxes, told to pay a fine of 500,000 euros. Their lawyer, Massimo Dinoia, vowed that the defense plans to appeal the convictions as well as the related fines and sentences.

"Dolce and Gabbana will not go to jail now or ever," Dinoia said.

Dolce & Gabbana, fashion's golden duo

Four others associated with the upscale Dolce & Gabbana brand -- including Domenico's brother Alfonso Dolce and company tax consultant Luciano Patelli -- also face prison time, though Dinoia and Pedio did not know the length of all their sentences. While the decision was announced Wednesday morning in a Milan court, authorities did not immediately release details to the media or public.

According to Pedio, investigators found that between 2004 and 2007 Dolce and Gabbana failed to tell Italian authorities about an offshoot company they'd set up in Luxembourg, costing Italy millions of euros in taxes.

"I'm very satisfied with the sentence," the prosecutor said. "It was a very elaborate (use of an offshore company) that appeared legal, but was illegal."

The fashion magnates' defense team said this wasn't a sweeping verdict. In a statement, the lawyers said the court found Dolce and Gabbana innocent "of the accusation of having unfaithfully declared their earnings," even as the two men were convicted on a "taxes declaration omission."

It's not clear how the court ruling will impact the storied Dolce & Gabbana company, if at all.

The two stylists debuted their brand in an October 1985 show in Milan. Since then, they have exploded to become one of the world's most recognizable and desired fashion companies, with an array of products and stores from Azerbaijan to Qatar to Singapore to the United States and many places in between.

Fashion's Galliano found guilty of making anti-Semitic comments

Journalist Livia Borghese reported from Rome and CNN's Greg Botelho wrote this story from Atlanta.

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