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OTRC: Dolce and Gabbana may face criminal trial over $1 billion tax fraud case

Domenico Dolce and Stefano Gabbana pose with singer Kylie Minogue in Milan, Italy. (www.facebook.com/DolceGabbana)

Designers Domenico Dolce and Stefano Gabbana, known for their top Italian fashion label Dolce & Gabbana, may stand trial for allegedly failing to pay taxes on more than $1 billion in income.

The duo's designs have been worn by the likes of Madonna, Justin Bieber, Scarlett Johansson, Kate Bosworth, Kylie Minogue and other celebrities. They are accused of defrauding the Italian revenue agency and authorities say they failed to pay taxes on more than $1 billion in income, the New York Times reported.

The two were indicted in November after being accused of setting up a holdings company in Luxembourg in order to evade high Italian taxes. Authorities have been investigating them for more than two years.

They had said in a statement in late 2010: "Since when does one have to pay taxes on money one never actually collected? It's an absurd demand based on a completely abstract calculation. This higher taxable sum ... is a virtual figure we have never received, the result of a theoretical accounting exercise."

If convicted, Dolce and Gabbana could face a maximum sentence of five to seven years in prison. On Friday, March 25, a judge is expected to tell them whether there is enough evidence to warrant a criminal trial, the New York Times said.

On Monday, Dolce and Gabbana visited the Central Academy of Fine Arts in Beijing, China. Speaking in front of some 300 aspiring designers, Dolce called himself a "fashion priest," the Wall Street Journal reported.

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