Dolce and Gabbana convicted of tax evasion, sentenced to jail

Fashion Dolce and Gabanna
Stefano Gabbana, left, and Domenico Dolce pose for picture during an interview at their showroom in New York, Tuesday, Dec. 4, 2007. (AP Photo/Seth Wenig)

From sharp, tailored suits to orange jumpsuits.

Storied designer duo Domenico Dolce and Stefano Gabbana were found guilty of tax evasion on one of two counts, a Milan court ruled Wednesday afternoon.

The designers were each sentenced to one year and eight months behind bars for failing to declare $268 million to authorities, a decision reached after a three hour-long jury deliberation. They were also ordered to cough up $670,000 to tax authorities. The designers were cleared of the second count which dealt with the tax rate paid and valuation of all D&G assets.

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The dramatic ruling is the outcome of years of court battles, stemming from the label's 2004 sale of its D&G lines to a Gado Srl, a Luxembourg-based holding company that's comprised of the first two letters of the designers' names. The move was to avoid Italy's hefty taxes on royalties, amounting to about 1 billion euros (or $1.3 billion). Unrelenting prosecutor Gaetano Ruta demanded Dolce, Gabbana and Christiana Ruella - a board member of the fashion house - be sentenced to two and a half years in prison for evading taxes within Italy. In April, Italy's Tax Commission slapped the two with a whopping $440 million fine for tax evasion.

Dolce and Gabbana have always insisted that they are innocent and plan to appeal the ruling. Their lawyer Massimo Dinoia told reporters Wednesday that the court-issued acquittal had expired. "The proof of their innocence is evident," Dinoia added.

Gabbana Instagrammed and tweeted Wednesday a photograph of a colorful citrus tree, moments after the verdict was announced.

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