Introduction

This appeal stems from the criminal tax trial of Michigan attorney Carl L. Collins, III, whose misuse of Interest on Lawyer’s Trust Accounts (IOLTAs) precipitated both state bar discipline and federal tax charges. A jury convicted Collins of five counts of willfully making false tax returns under 26 U.S.C. § 7206(1). After verdict, Collins sought a new trial under Criminal Rule 33 based on a new expert’s critique of the government’s income methodology, and he challenged the admission of his bar disciplinary matters as “other acts” under Evidence Rule 404(b).

The Sixth Circuit affirmed, holding that (1) the district court did not err in admitting state disciplinary evidence to prove willfulness and intent under Rule 404(b)(2), and (2) the court properly denied a Rule 33 motion where the “new” expert analysis merely repackaged arguments the jury had already heard and rejected. The court also upheld the restitution amount imposed as a condition of supervised release.

This commentary examines the court’s reasoning, how it operationalizes key doctrines (Rule 404(b), willfulness in tax crimes, constructive receipt/cash-basis accounting for lawyers who commingle trust funds, and Rule 33 standards), and what the decision signals for future prosecutions and defense strategies in professional and tax-fraud cases.

Summary of the Opinion

• Issues on appeal:
  • Whether evidence of Collins’s Michigan Attorney Grievance Commission investigation and discipline for IOLTA misuse was improperly admitted under Rule 404(b).
  • Whether the district court abused its discretion in denying a new trial under Rule 33 based on post-verdict expert analysis criticizing the government’s income methodology.
  • Whether the restitution amount imposed as a condition of supervised release was an abuse of discretion.
• Holdings:
  • Rule 404(b): The disciplinary evidence was admissible for the proper purpose of proving willfulness/intent; its probative value was not substantially outweighed by unfair prejudice. Two witnesses over a 12-day trial, financial/transactional nature, and strong linkage to contemporaneous concealment made it appropriate.
  • Rule 33: A new trial is an extraordinary remedy. Collins’s new expert did not present newly discovered evidence or a genuinely new theory; the analysis largely mirrored arguments the defense presented and the jury rejected. No abuse of discretion in denying a new trial.
  • Restitution: Although Title 26 offenses are not covered by the federal restitution statutes, restitution may be imposed as a condition of supervised release. The court did not abuse its discretion in crediting the government’s loss methodology, particularly given the parties’ stipulation to a reduced figure and the record support.
• Result: Convictions and restitution order affirmed.

Analysis

Precedents Cited and Their Influence

• United States v. Barnes, 822 F.3d 914 (6th Cir. 2016), and United States v. Bell, 516 F.3d 432 (6th Cir. 2008):

  These cases supply the Sixth Circuit’s three-part Rule 404(b) framework and the standard of review trifurcation: (1) clear error for whether the other act occurred; (2) de novo for whether it was admitted for a proper non-character purpose; (3) abuse of discretion for Rule 403 balancing. The panel leans on Barnes to conclude the disciplinary evidence was admissible to prove specific intent and willfulness because it was substantially similar to, and temporally proximate with, the tax-fraud conduct.

• United States v. Farrad, 895 F.3d 859 (6th Cir. 2018), and United States v. Hughes, 505 F.3d 578 (6th Cir. 2007):

  These cases inform the abuse-of-discretion review of Rule 33 denials and the deference due to the district court’s weighing of the evidence and credibility assessments. The panel underscores the limited appellate role in second-guessing the trial court’s evaluation of the competing expert methodologies.

• United States v. Munoz, 605 F.3d 359 (6th Cir. 2010); United States v. VanDemark, 39 F.4th 318 (6th Cir. 2022); United States v. Burks, 974 F.3d 622 (6th Cir. 2020):

  These decisions frame Rule 33’s “interest of justice” standard and repeatedly stress that a new trial is an extraordinary remedy, appropriate only when the verdict “exceeds the bounds of reasonableness.” The panel uses these cases to reject Collins’s attempt to relitigate via a more “compelling” expert post-verdict.

• Isaacson v. Commissioner, 119 T.C.M. (CCH) 1107 (2020), and Canatella v. Commissioner, 113 T.C.M. (CCH) 1549 (2017):

  Tax Court authorities explain when funds in a lawyer’s trust account count as income for a cash-basis taxpayer. They hold that trust funds are not income only if the lawyer complies with trust-account rules; commingling/personal use can convert trust deposits into income upon receipt. The panel relies on this reasoning to uphold the government’s method of counting IOLTA deposits as income in the years received where Collins commingled and used funds personally.

• United States v. Vandeberg, 201 F.3d 805 (6th Cir. 2000); United States v. Kilpatrick, 798 F.3d 365 (6th Cir. 2015); United States v. Behnan, 554 F. App’x 394 (6th Cir. 2014):

  These cases establish that while tax offenses under Title 26 are not subject to mandatory restitution statutes, courts may impose restitution as a condition of supervised release and may consider relevant conduct to determine the loss. The panel uses this to sustain the restitution order and its amount.

• Barrow v. United States, No. 96-1687, 1997 WL 31427 (6th Cir. Jan. 27, 1997) (unpublished):

  Cited for the proposition that a defendant may not relitigate a case under a new theory by swapping in a new expert post-trial to reinterpret evidence presented or available at trial—a direct analogue to Collins’s Rule 33 posture.

Legal Reasoning

1) Rule 404(b): Disciplinary Evidence to Prove Willfulness and Intent

The Sixth Circuit affirmed admission of Collins’s state disciplinary matters regarding IOLTA misuse as “other acts” evidence under Rule 404(b)(2) to prove willfulness—an essential element under 26 U.S.C. § 7206(1). Several features drove the analysis:

• Proper purpose: The government needed to show Collins acted “willfully,” i.e., voluntarily and intentionally violating a known legal duty. Evidence that Collins:
  • Attended a bar seminar warning against using IOLTAs to conceal income from the IRS;
  • Was investigated and disciplined for commingling and misuse; and
  • Concealed the same Bank of America IOLTA from both the bar and the IRS around the same period,

  made the disciplinary evidence probative of his knowledge and intent rather than mere character propensity.

• Similarity and temporal proximity: The conduct was substantially similar (concealment/misuse of the same account) and reasonably near in time to the false return offenses, satisfying the Sixth Circuit’s similarity-proximity test for intent evidence.
• Rule 403 balance: The district court found the evidence financial and transactional (not inflammatory), comprising a small proportion of a long trial, and tightly linked to the charged willfulness. The appellate court saw no clear error of judgment in concluding probative value was not substantially outweighed by unfair prejudice.
• Intrinsic evidence question: The government argued the disciplinary evidence was intrinsic; the panel did not decide this, because it affirmatively passed Rule 404(b)(2)/403 scrutiny as extrinsic evidence.

2) Rule 33: No New Trial for “Better Expert” Re-run

Rule 33 authorizes a new trial “if the interest of justice so requires,” but the Sixth Circuit underscores that this is an extraordinary remedy appropriate only when a verdict exceeds the bounds of reasonableness. Collins disclaimed newly discovered evidence and weight-of-the-evidence arguments. His theory was that the government’s “flawed” methodology meant justice required a new trial.

The district court held a hearing, heard Collins’s new expert (Perun), and reaffirmed its confidence in the verdict because:

• Overlap with trial arguments: Perun’s criticisms—about ignoring outstanding obligations to third parties, timing differences between earning and receiving funds, and approval to recognize fees—had been probed at trial via cross-examination and through Collins’s trial expert (Kaufman). Perun’s work was “more detailed,” but not meaningfully novel.
• Cash-basis principles: The government’s fraud examiner (Williams) focused on current-year inflows/outflows and treated fees as income when available and determinable in the IOLTA—consistent with cash-basis treatment and constructive receipt principles, particularly where trust-account noncompliance commingles funds.
• Isaacson/Canatella support: Where lawyers commingle client and personal funds and use trust accounts for personal purposes, deposits can constitute income upon receipt; the trust-account shield applies only to compliant trust handling. Collins’s disciplinary history and practices put him in the commingling category.
• No miscarriage of justice: The jury weighed these dueling methodologies and convicted on some counts while acquitting others, reflecting discriminating deliberation. The district court did not clearly and manifestly abuse its discretion in denying a new trial.

3) Restitution as a Condition of Supervised Release

Although federal restitution statutes do not authorize restitution for Title 26 tax crimes, courts may impose restitution “for the full amount of the victim’s loss” as a condition of supervised release. The presentence report calculated loss with relevant conduct spanning multiple years and entities; the parties later stipulated to $661,032 (significantly below the calculated loss), preserving Collins’s ability to contest methodology.

The Sixth Circuit found no abuse of discretion in the district court’s reliance on Williams’s methodology (already credited at trial and upheld on appeal), rejecting Collins’s renewed “double-counting” argument about Alpha Living dividends. The government’s approach treated how the funds actually flowed (checks deposited directly to the IOLTA, not Alpha Living’s account), and the panel concluded the district court reasonably determined there was no impermissible double counting. Given the stipulation and the overall record, no remand was required.

Impact

• Rule 404(b) in professional-fraud and tax cases: This decision reinforces that state bar disciplinary actions—especially those addressing misuse of client trust funds—can be potent intent evidence in federal tax prosecutions. The opinion underscores the admissibility of these proceedings when the acts are similar, temporally linked, and directly probative of willfulness.
• Cash-basis attorneys and IOLTAs: Lawyers who use IOLTAs as de facto operating or personal accounts risk having deposits treated as income upon receipt due to commingling and constructive receipt doctrines. The court’s use of Isaacson and Canatella signals that trust-account compliance is not merely ethical—it has tax consequences.
• Rule 33 “new trial” discipline: Post-verdict expert “upgrades” that revisit trial themes will rarely justify a new trial absent genuinely new evidence or a verdict that defies reason. Defense teams should develop and present comprehensive expert methodologies at trial; holding back for Rule 33 will likely fail.
• Restitution in tax cases via supervised release: The court reiterates that while MVRA-style restitution is unavailable for Title 26 offenses, equivalent relief is reachable as a supervised-release condition, with loss measured by relevant conduct. Stipulations to amounts, even with reservations, may be difficult to unwind on appeal absent clear methodological error.
• Evidentiary gatekeeping affirmed: The panel’s deference to the district court’s 403 balancing and Rule 33 assessment encourages careful pretrial and trial records. Narrow, well-cabined presentations of potentially prejudicial “other acts” evidence will be sustained when probative value is high and the presentation is proportionate.

Complex Concepts Simplified

• IOLTA (Interest on Lawyer’s Trust Account): A trust account where client or third-party funds are held temporarily. Ethical rules require immediate segregation and prompt disbursement. Using an IOLTA to pay personal or general business expenses is commingling and violates professional rules.
• Cash-basis accounting: Income is reported in the year it is actually or constructively received; expenses are deducted when paid. For attorneys, once their fee portion is available and determinable—even if sitting in an IOLTA—income may be recognized, especially if the lawyer commingles funds or uses the account personally.
• Constructive receipt: Income is taxable when it is credited to a taxpayer’s account or otherwise made available without substantial limitation, even if not physically withdrawn. Commingling can remove the “trust” limitation that would otherwise delay recognition.
• Rule 404(b) other-acts evidence: Evidence of other wrongs cannot be used to prove propensity, but can be used to prove intent, knowledge, absence of mistake, etc., when sufficiently similar and close in time and when probative value is not substantially outweighed by unfair prejudice.
• Rule 403 balancing: Courts exclude relevant evidence if its probative value is substantially outweighed by risks like unfair prejudice or confusion. Limited, transactional evidence closely tied to issues of intent typically survives this balancing.
• Rule 33 new trial: A safety valve for verdicts that are clearly unreasonable or infected by substantial error, but not a vehicle to re-argue with new experts or refined versions of trial arguments absent genuinely new evidence.
• Restitution in Title 26 prosecutions: Federal statutes do not mandate restitution for tax crimes, but courts can impose restitution as a condition of supervised release and may measure loss by relevant conduct to the offense(s) of conviction.

Conclusion

The Sixth Circuit’s unpublished opinion in United States v. Collins delivers two practical messages with broad reach. First, when a lawyer’s state disciplinary record bears directly on willfulness—especially through contemporaneous misuse of the very accounts used to conceal income—Rule 404(b) permits its admission to prove intent, and careful trial court balancing will be given deference. Second, Rule 33 is not a do-over: defendants cannot convert post-verdict expert elaborations of already-litigated theories into a “miscarriage of justice.”

On the tax side, the panel’s integration of Isaacson and Canatella underscores a critical compliance point: a lawyer’s adherence (or not) to trust-account rules has tax consequences. For cash-basis lawyers, commingling and personal use of IOLTA funds can trigger income recognition on receipt. Finally, the court confirms that restitution linked to relevant conduct may be imposed as a condition of supervised release in tax cases, and stipulations are difficult to unwind absent clear error.

Key takeaways for practitioners and regulated professionals:

• Expect disciplinary records to be fair game to prove willfulness where the conduct is similar and proximate.
• In tax prosecutions of attorneys, IOLTA compliance intersects with income recognition; commingling erodes the shield that otherwise delays recognition.
• Build your expert case completely at trial; post-verdict “better” experts rarely move the Rule 33 needle.
• Stipulated restitution in tax cases—though not mandated by statute—can be robustly sustained as a supervised-release condition when grounded in relevant conduct and supported by the trial record.

While unpublished, Collins offers a sharp, practical synthesis of evidentiary, accounting, and sentencing principles that will guide prosecutors and defense counsel in future professional-fraud and tax cases across the Sixth Circuit and beyond.