Dolce and Gabbana, the famed Italian fashion designers, could potentially be heading to prison.

Domenico Dolce and Stefano Gabbana are accused of defrauding the Italian revenue agency and failing to pay taxes on more than $1 billion of income.

The company was started by the two designers in the 1980s in Italy. Their designs are regularly seen on Madonna, Scarlett Johansson and other celebrities. In 2005, their turnover was $750 billion.

Prosecutors say the revenue service was duped out of taxes on sales and income from royalties. The brands were sold for €360 million, or $508 million - an amount that investigators say was just under a third of their actual value, according to their own calculations. Court papers filed by prosecutors allege a "criminal design" to defraud the state.

Specifically, Dolce and Gabbana have been accused of setting up a "dummy company" in Luxembourg to dodge taxes, and then not declaring the income they made from that company. Both designers have been charged, as well as three company executives and their tax advisor.

If charged and convicted, they could each face up to five years in prison.

http://www.thirdage.com/news/dolce-and-gabbana-may-face-criminal-trial-tax-evasion_3-25-2011
www.dolcegabbana.com