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Gucci pays IRS in tax case

NEW YORK -- Leather goods retailer Gucci America Inc. paid $20.5 million to the Internal Revenue Service Thursday in a guilty plea to charges of conspiracy and tax evasion.

The charges stemmed from former chairman Aldo Gucci's 1986 plea to evading more than $7 million in personal income taxes. The patriarch of the Gucci family was sentenced to a year in prison and was released last year.

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Gucci America, formerly known as Gucci Shops Inc., admitted using false bills and invoices by foreign corporations from 1972 to 1982 in order to disguise a diversion of funds to Gucci and other members of the family.

The scheme enabled the Guccis and the corporation to evade personal and corporate income taxes, according to Stuart Abrams, the assistant U.S. attorney prosecuting the case.

Prosecutors did not disclose amount of corporate taxes evaded, but the $20.5 million covered the unpaid taxes, interest and penalties, according to company lawyer Alan Tuttle. In addition, the the company was fined $30,000 and prosecution costs.

'It is a great satisfaction to us to finally put this unfortunate episode behind us and to look to the future,' said Domenico De Sole, who became president of the company when Gucci resigned in 1984. 'No one can take pleasure in acknowledging wrongdoing, albeit that of prior management.

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'However, this action is a major step toward the achievement of the two principal objectives of the current management: to re-establish Gucci America as a law-abiding corporate citizen and to create a strong management structure and solid financial footing for the company,'he said.

'We are closing the tax matters at the end of the company's most successful year ever,' he said in a statement. 'We are confident that, with the problems of the past resolved, we will continue the Gucci tradition of great success.'

Gucci America is a privately held company that sells upscale leather goods and clothing through owned and franchised shops.

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