The Seventh Circuit Court of Appeals has upheld the convictions and sentence of former Illinois state legislator Annazette Collins, who was found guilty of failing to file tax returns and making false statements on her tax returns. Collins had appealed her case, arguing insufficient evidence of willfulness and errors in evidentiary rulings by the district court.
Collins, following a long career in the Illinois state legislature, started two businesses in 2013: a lobbying and consulting firm named Kourtnie Nicole, Corp. (KNC), and sold life insurance for American Income Life Insurance Company (AIL). After initially complying with tax requirements, the court found that in subsequent years, Collins significantly underreported her income or failed to file returns altogether.
Factual Background: Years of Underreporting
The evidence presented at trial painted a picture of systematic evasion. For the 2014 tax year, Collins earned about $118,000 but reported only about $11,500, omitting all income from AIL. Furthermore, AIL terminated her employment that year for submitting fraudulent insurance policies.
The trend continued into 2015. Despite earning close to $84,000, Collins reported only $10,000. This figure failed to account for $75,000 transferred from KNC to her personal accounts, along with KNC funds used for personal expenses like her daughter’s private school tuition and camp.
For the 2016 calendar year, Collins failed to file any tax returns—corporate or personal—despite KNC bringing in $162,000 in gross receipts and Collins personally taking in around $70,000 through transfers and personal expenditures of company funds.
The IRS eventually caught up, issuing a notice in 2016 regarding over $96,000 in unreported AIL income from 2014. In response, Collins amended her 2015 return, adding the AIL income but offsetting the resulting tax liability by claiming nearly $50,000 in new, substantial deductions, including drastically increased business mileage.
Procedural Hurdles and Convictions
A grand jury indicted Collins in 2021 on six counts, including false statements related to her 2014 and 2015 individual returns and willful failure to file returns for 2016 (both individual and corporate).
Following a trial in the Northern District of Illinois, presided over by Judge Jorge L. Alonso, a jury convicted her on four counts: false statements for 2014 and 2015, and failure to file for 2016 (herself and KNC). She was sentenced to one year in prison and one year of supervised release.
Willfulness Challenge Rejected
Collins argued that the government failed to prove her conduct was “willful”—meaning a voluntary, intentional violation of a known legal duty. The Seventh Circuit panel, composed of Judges St. Eve, Lee, and Kolar, reviewed this challenge *de novo* but gave deference to the jury’s verdict.
The Court found ample evidence supporting the jury’s finding of willfulness. For the false statement counts, the evidence showed Collins had previously reported income from the same sources, suggesting she knew her duty. The sheer magnitude of the income disparity between what she earned and what she reported allowed the jury to infer intent to evade taxes. Testimony from her tax preparer, who stated Collins supplied the false information, further supported this.
Regarding the failure-to-file counts for 2016, the Court noted that Collins’s history of filing returns, combined with her sophisticated business acumen, established she knew of her filing obligation. The Court concluded that the failure to file in 2016, given her substantial income that year, supported an inference of willful violation.
The appellate court dismissed Collins’s attempts to discredit the tax preparer’s testimony or argue that her sponsorship of state tax legislation didn’t prove she was as knowledgeable as a CPA, stating that circumstantial evidence was sufficient and that the jury was entitled to weigh credibility.
Evidentiary Rulings Upheld
Collins also challenged three key evidentiary rulings made by the district court:
1. Exclusion of Amended Return and Payment Plan: Collins wanted to introduce evidence of her amended 2015 return and subsequent IRS payment plan to show good faith *after* the fact. The Seventh Circuit affirmed the exclusion, noting that the crime is complete when the return is signed or the filing deadline passes. Since Collins only took corrective action *after* the IRS notified her of the investigation, the evidence was deemed more likely to confuse the jury or suggest an attempt to cover up wrongdoing rather than prove an innocent mistake regarding her prior state of mind. This ruling was found well within the district court’s discretion under Federal Rule of Evidence 403.
2. Cross-Examination on AIL Termination: The government sought to cross-examine Collins about her fraudulent conduct at AIL if she chose to testify, using it to show her character for untruthfulness (Rule 608(b)). Because Collins ultimately chose *not* to testify, the Seventh Circuit ruled that she waived her right to appeal this preliminary ruling, citing the Supreme Court’s decision in *Luce v. United States*. The Court reasoned that appellate review of conditional rulings is impossible when the condition (testifying) is not met.
3. Limitation on Expert Testimony: Collins objected to the exclusion of her forensic accountant’s opinions that were based solely on Collins’s out-of-court statements (hearsay). Following precedent in *United States v. Beavers*, the Seventh Circuit held that the district court did not abuse its discretion. If an expert’s key conclusions lack support once the defendant’s unsupported hearsay is stripped away, the testimony can be excluded as unreliable, which does not violate the defendant’s constitutional right to present a defense.
Sentence Correction Motion Denied
Finally, Collins appealed the district court’s denial of her post-sentencing motion to correct her sentence. She requested the judge increase her prison time by one day to cross the threshold needed to qualify for federal “good-time” credits, potentially reducing her time incarcerated.
The Seventh Circuit swiftly affirmed the denial, but on jurisdictional grounds. Federal Rule of Criminal Procedure 35(a) allows a court to correct clear errors in sentencing within 14 days. Because Collins filed her motion five months after sentencing, the district court lacked the authority—the jurisdiction—to alter the sentence.
The judgment of the district court was affirmed across the board.