By Lisa Jucca

MILAN (Reuters) - An Italian court is expected to rule on Wednesday on whether legendary fashion duo Domenico Dolce and Stefano Gabbana should be sent to prison for allegedly hiding hundreds of millions of euros from the tax authorities.

The case, one of the few prominent tax disputes to go to court in Italy, dates back to 2004, when the pair sold their brand to Luxembourg-based holding company Gado to allegedly avoid declaring taxes on royalties of about 1 billion euros ($1.3 billion).

Cash-strapped Italy has recently stepped up action on tax evasion, something that was also featuring high at this week's Group of Eight meeting.

The Italian tax agency has carried out highly publicised tax raids at chic tourist locations while increasing scrutiny on corporate structures.

Dolce and Gabbana, who count pop singer Madonna and model Naomi Campbell among their clients and who draw inspiration from Italy's "dolce vita" (sweet life) style of the 1950s, have denied the charges.

Several of their business associates are also on trial in Milan.

Separate to the criminal case, Italy's Tax Commission slapped the stylists earlier this year with 343.4 million euros in fines for not declaring in Italy earnings related to Gado, current owner of the D&G and Dolce & Gabbana brands.

Prosecutor Gaetano Ruta, who is working on the criminal case, said late in May the two should be sentenced to two and half years in jail as they were the people who "indirectly" benefited most from the operation.

"Gado was 80 percent controlled by D&G srl which was owned 50 percent each by Dolce and Gabbana," Ruta has said.

The harshest sentence available to the court in these cases is five years. The two fashion designers can appeal against a potentially negative verdict twice before it gets to Italy's highest court, a process that could take years.

Previous tax cases involving celebrities in Italy have led to out-of-court settlements.

In 2000 the late opera singer Luciano Pavarotti paid more than $12 million in back taxes, while former MotoGP world champion Valentino Rossi agreed to pay $51 million to Italy's tax agency in 2008.

($1 = 0.7779 euros) ($1 = 0.7467 euros)

(Additional reporting by Manuela D'Alessandro; Editing by David Holmes)

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By Nate Raymond

(Reuters) - A federal judge has ordered United Technologies Corp to pay $473 million plus interest for manipulating costs to win U.S. Air Force jet engine contracts in the 1980s.

The ruling by U.S. District Judge Thomas Rose in Dayton, Ohio, was issued on Monday for a 1999 lawsuit in which the Department of Justice sought reimbursement for overcharges by United Technologies subsidiary Pratt & Whitney.

Interest on the award could "be a couple or few hundred million dollars," said Christian Mayes, an analyst at Edward Jones. Rates ranged from 6 percent to 8 percent a year and would go back as far as 1986, the ruling said.

Ian Race, a spokesman for United Technologies, said the company would appeal.

"We strongly disagree with the court's opinion concerning the Fighter Engine Campaign from the 1980s," Race said in a statement on Tuesday.

Representatives for the Justice Department did not respond to requests for a comment.

Rose found United Technologies liable in 2008 under the False Claims Act, a Civil War-era law that allows the federal government to seek reimbursement from companies that submit inflated claims for payment.

At that time, the judge awarded the U.S. government $7.09 million in civil penalties but found it suffered no actual damages during the period in question thanks to price concessions from Pratt & Whitney.

He also found that administrative proceedings before the Armed Services Board of Contract Appeals had precluded the Justice Department from pursuing the claims of breach of contract, payment by mistake and unjust enrichment.

In November 2010, the 6th U.S. Circuit Court of Appeals upheld the liability finding but sent the case back to Rose to determine damages, ultimately leading to Monday's ruling.

"The government should not have paid the amounts that the government proved it paid as a direct result of United Technologies' fraud," Rose wrote.

In a filing with the U.S. Securities and Exchange Commission following the close of trading on Tuesday, United Technologies said it expected the Justice Department would continue to seek a total judgment of $660 million, including interest.

United Technologies said a government victory could materially hurt its operating results. The company posted net income last year of $5.13 billion.

"Should the government ultimately prevail, the outcome of this matter could result in a material adverse effect on our results of operations in the period in which a liability would be recognized or cash flows for the period in which damages would be paid," United Technologies said in its filing.

United Technologies shares closed Tuesday up $1.19 at $96.17 on the New York Stock Exchange.

The case is U.S. v. United Technologies Corp, U.S. District Court, Southern District of Ohio, No. 99-00093.

(Reporting by Nate Raymond in New York; additional reporting by David Ingram in Washington; Editing by Maureen Bavdek and Carol Bishopric)

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NEW YORK (Reuters) - Dish Network Corp said on Tuesday that it would not make a new offer to buy No. 3 U.S. wireless provider Sprint Nextel and focus instead on its tender offer for Clearwire Corp

"While Dish continues to see strategic value in a merger with Sprint, the decisions made by Sprint to prematurely terminate our due diligence process and accept extreme deal protections in its revised agreement with SoftBank, among other things, have made it impracticable for Dish to submit a revised offer by the June 18th deadline imposed by Sprint," Dish said in the statement.

This is the latest turn in a take-over battle that started on April 15 when Dish - led by its chairman and founder, Charlie Ergen - offered to buy Sprint for $25.5 billion in a challenge to Japan's SoftBank Corp.

Known for his aggressive tactics in deal-making, Ergen is looking to expand into the wireless market as its traditional pay-TV business has been maturing.

(Reporting by Greg Roumeliotis in New York; Editing by Bernard Orr)

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