                              In the

    United States Court of Appeals
                For the Seventh Circuit
No. 12-1718

UNITED STATES OF AMERICA,
                                                  Plaintiff-Appellee,

                                 v.


EDDIE LEE,
                                               Defendant-Appellant.




        Appeal from the United States District Court for the
                    Central District of Illinois.
            No. 10 CR 30058 — Richard Mills, Judge.



      ARGUED MAY 22, 2013 — DECIDED AUGUST 1, 2013



   Before FLAUM, ROVNER, and SYKES, Circuit Judges.

   ROVNER, Circuit Judge.       A jury convicted defendant-
appellant Eddie Lee of conspiring to distribute and possessing
with the intent to distribute 50 or more grams of a substance
2                                                     No. 12-1718

containing cocaine base, in violation of 21 U.S.C. §§ 841(a)(1),
841(b)(1)(A), and 846. The district court ordered him to serve
a prison term of 20 years. Lee appeals, contending that the
district court abused its discretion by admitting into evidence
at trial proof that he had previously been convicted of possess-
ing cocaine base. See Fed. R. Evid. 404(b). We agree and
reverse.
                                I.
    Lee was named in a 2010 indictment along with co-defen-
dants Darin Hurt, Anthony Clardy, and Christopher Holcomb.
Hurt was a retail seller of crack cocaine in Springfield, Illinois,
who was assisted on occasion by Holcomb and Clardy. It was
the government’s theory that Lee was one of Hurt’s suppliers.
Drug enforcement agents were led to Hurt, Holcomb, and
Clardy by Roderick Pickett, one of Hurt’s customers. Pickett
assumed the role of a confidential informant and made two
controlled purchases of crack cocaine from Hurt in the Fall of
2009 that were recorded on video. Those purchases, along with
the discovery of a distribution-sized quantity of crack cocaine
in a car that Lee was driving in December 2009, led to the
eventual arrest and indictment of Lee, Hurt, Clardy, and
Holcomb.
   Of the four defendants, only Lee went to trial. Lee initially
pleaded guilty to both the conspiracy and possession charges,
on the understanding that the more favorable statutory
penalties put into place by the Fair Sentencing Act of 2010, 124
Stat. 2372 (“FSA”), would apply at his sentencing. (The district
court in fact had applied the FSA in sentencing Holcomb
before Lee pleaded guilty.) But, less than a month after Lee
No. 12-1718                                                       3

pleaded guilty, this court ruled in United States v. Fisher, 635
F.3d 336 (7th Cir.), reh’g en banc denied over dissent, 646 F.3d 429
(7th Cir. 2011), that the FSA did not apply to offenses commit-
ted prior to its enactment. The Supreme Court ultimately ruled
otherwise the following year, Dorsey v. United States, 132 S. Ct.
2321 (2012), but by that time Lee had been permitted to
withdraw his guilty plea and had proceeded to trial–twice.
    Lee’s first trial, in June 2011, ended with the district court’s
declaration of a mistrial after the jury was unable to reach a
verdict. When Lee was retried the following month, the jury
found him guilty on both counts of the indictment in which he
was named: Count One, charging that Lee conspired with Hurt
to distribute and to possess, with the intent to distribute, more
than 50 grams of crack cocaine, and Count Four, charging Lee
with possessing, with the intent to distribute, more than 50
grams of crack cocaine.
    With the exception of the Rule 404(b) evidence admitted at
Lee’s second trial, the proof was essentially the same at both
trials. Hurt was the government’s principal witness, describing
each of the transactions in which he had engaged with Lee.
Beyond Hurt’s testimony, the evidence against Lee was, in
good measure, circumstantial. Phone records established
telephonic contact between Lee and Hurt consistent with the
timing of the transactions Hurt recounted: for example, Hurt
testified that Lee typically called him when he was on his way
to Springfield to make a delivery of cocaine, and phone records
confirmed that the two men were in telephonic contact prior to
the deliveries Hurt described. None of the telephone calls were
recorded, however. Moreover, although Pickett was wired
during his transactions with Hurt, Lee was not present during
4                                                  No. 12-1718

those transactions, and no other witness was privy to Hurt’s
interactions with Lee.
    Hurt had begun selling crack cocaine in or about 2006. Hurt
was paralyzed from the shoulders down and was otherwise
relying on disability payments for his income. Hurt’s brother
Clardy typically helped him prepare and package cocaine for
distribution to his customers; Holcomb, as we have noted, also
helped Hurt with the sales. At first, Hurt’s supplier was Lee’s
cousin, Mikey Smith. After Smith was jailed in 2007, Hurt
turned to other suppliers. Lee eventually became one of them.
Hurt had known Lee since 2002, but so far as the record
reveals, Lee had not sold crack cocaine to Hurt prior to the
2009 sales that Hurt recounted at trial.
    Hurt described for the jury four transactions with Lee that
occurred in the Summer and Fall of 2009. In late July, Lee sold
17 ounces of crack to Hurt at a price of $900 an ounce. Lee
fronted the cocaine to Hurt; Hurt then sold the cocaine to
customers over the course of a day or two with Holcomb’s
help; and then Hurt paid Lee from the proceeds. Two weeks
later, in early August, Lee provided a 13-ounce quantity to
Hurt for the same price per ounce and was again paid after
Hurt and Holcomb sold the cocaine to Hurt’s customers. Hurt
testified that following this second transaction, he turned over
to Lee all of the proceeds from his sales, leaving nothing for
himself.
   On the morning of September 1, 2009, Lee dropped off a
nine-ounce quantity of crack to Hurt at his home. Within a day,
Hurt and Holcomb had sold the cocaine and paid Lee. Among
Hurt’s customers that day was Pickett, who recorded his
No. 12-1718                                                    5

purchase in his capacity as a confidential informant. When
Pickett asked Hurt when his supply had arrived, Hurt told him
he had gotten it that morning. Pickett purchased a half-ounce
of crack from Hurt at a price of $600; Clardy assisted Hurt with
the sale. Hurt testified that after he had disposed of all of the
cocaine supplied by Lee, he once again turned all of the
proceeds over to Lee, with no profit remaining for himself.
    Pickett made another controlled purchase of cocaine from
Hurt on September 17. Pickett tried to make the purchase a day
earlier, but Hurt told him he had no drugs on hand to sell him.
On the following morning (the 17th), Lee delivered four ounces
of crack cocaine to Hurt. Hurt and Holcomb again disposed of
that quantity in a day’s time. Pickett was among their custom-
ers: he purchased an ounce of crack for a nominal price of
$1200, and then Hurt then kicked back $100 of the purchase
price to him. Although Lee was not present in Hurt’s home,
where Pickett made the purchase, the camera that Pickett was
wearing captured Lee sitting in the yard of another house that
Hurt owned just down the alley from Hurt’s residence; and
Lee’s Ford Taurus was also parked in the vicinity. Hurt
acknowledged on the witness stand that Lee’s cousin Poncho
was renovating the other house for Hurt (Lee, in fact, was
Hurt’s contact for Poncho); and no surveillance agent was ever
able to see, let alone photograph, Lee transacting narcotics
business with Hurt. As he walked back to his own vehicle
following the transaction with Hurt, Pickett had a brief on-
camera conversation with Lee during which chess and house-
siding, but not narcotics, were mentioned.
  On December 2, Lee was on his way to Springfield when he
was pulled over on U.S. Interstate 55 by McLean County
6                                                   No. 12-1718

Sheriff’s Deputy Jason Tuttle. The traffic stop was not pre-
planned and had nothing to do with the investigation of Hurt
and Lee; Tuttle stopped Lee because the registration on the
Honda Accord he was driving had been suspended. Lee told
Tuttle that the car belonged to his goddaughter. The deputy
led a drug-detecting dog around car, and the dog alerted at the
passenger door. On the strength of the dog’s alert, the deputy
and backup officers proceeded to conduct a fairly thorough
search of the car. While looking through the trunk, which
Tuttle described as “loaded down” with “just a lot of junk,
really,” R. 179 at 74, one of the deputies lifted the spare tire,
without going so far as to remove it, but did not see anything
there. The search produced no drugs. The car was impounded
due to the suspended registration; and Lee was dropped off at
a highway rest area. Lee called Hurt to advise him that he had
been pulled over and asked him for a ride.
    Lee was stopped a second time later that same day. This
stop was made as part of the narcotics investigation. After Lee
called Hurt, Hurt had called Pickett and asked Pickett to pick
up Hurt and then Lee. Before he picked up Hurt, Pickett called
drug enforcement agents and told them he was on his way to
pick up Hurt and Hurt’s supplier. After Pickett had picked up
both men, an officer stopped the car on the premise of a vehicle
code violation and, after confirming the identities of the men,
searched the car. He found no drugs in the car and let the men
go with a warning. In the course of the stop, however, Lee
volunteered that he had been stopped earlier that day and that
his car had been towed. That disclosure led agents to the tow
yard where the Honda Accord had been taken.
No. 12-1718                                                     7

    A second search of the car at the tow yard proved more
fruitful than the first. At the yard, agents walked a narcotics
dog around the car and, once again, the dog alerted to the
passenger door. Officers then obtained a warrant to search the
vehicle. The ensuing search, which took place more than eight
hours after Lee first was stopped on the Interstate, produced
a wrinkled black plastic bag that was located behind the spare
tire. A latent fingerprint matching Lee’s would later be
discovered on the outside of that bag. Inside of the black plastic
bag was a clear Ziploc bag containing eight smaller bags, seven
of which contained one-ounce quantities of crack cocaine and
the last of which contained a smaller quantity of powder
cocaine. Collectively, the bags contained 210 grams of crack
cocaine, worth approximately $21,000. It was that cocaine
which was the basis for the charge in Count Four of the
indictment alleging that Lee possessed with the intent to
distribute in excess of 50 grams of crack cocaine.
    Lee presented no witnesses, but through cross-examination
and argument, the defense did manage to poke holes in the
government’s case. Naturally, Lee’s counsel pointed out to the
jury that, in the absence of evidence verifying Hurt’s testimony
as to his transactions with Lee, the prosecution’s case de-
pended to a significant degree upon the believability of Hurt’s
testimony. Hurt had credibility issues: besides being a cocaine
dealer who stood to benefit from his testimony against Lee,
Hurt was a regular and substantial user of marijuana who
smoked four to five “blunts” daily, and in fact could be seen
sharing a blunt with Pickett on the video recording of the
September 1 transaction. Hurt also helped the defense when he
agreed on cross-examination that he “d[id]n’t remember much
8                                                   No. 12-1718

of anything at all about th[e] supposed occasions” on which he
had purchased cocaine from Lee and that “it was the govern-
ment that helped [him] remember those occasions … .” R. 180
at 143. Pickett had issues of his own: aside from being a paid
informant, he disclosed on the witness stand that he had
decided to expose Hurt’s drug-dealing after he surmised that
Hurt had told police where to find him on an outstanding
warrant. The discovery of cocaine in the Honda Accord that
Lee was driving on December 2 was, of course, damning by
itself; but the defense made much of the fact that the cocaine
was not discovered until many hours after Lee was pulled over
and the car had been sitting in the tow yard for the better part
of the day.
   As we have said, the first jury that heard this evidence was
unable to reach a verdict on either the conspiracy or the
possession charge against Lee.
    At the outset of the second trial, the government moved
pursuant to Rule 404(b) to admit evidence that, in 2004, Lee
had been convicted of possessing more than 15 but less than
100 grams of cocaine. The government contended that the prior
conviction was probative of Lee’s knowledge, intent, and
absence of mistake. In the government’s view, Lee’s defense at
the first trial demonstrated that those matters were in dispute:
the defense had denied that Lee knew that there was cocaine
in the car he was driving on December 2, disclaimed any intent
to distribute cocaine, and had argued that the cocaine would
have been found during the first, roadside search of the car if
in fact it was there at that time, implying that someone else had
put the cocaine in the trunk of the car after it was impounded.
Evidence that Lee had previously engaged in cocaine-related
No. 12-1718                                                       9

activity “tend[s] to show that [Lee] was familiar with the
cocaine [business] and was not some innocent bystander
mistakenly caught up by overzealous law enforcement.” R. 179
at 5 (quoting United States v. Wilson, 31 F.3d 510, 515 (7th Cir.
1994) (in turn quoting United States v. Kreiser, 15 F.3d 635, 640
(7th Cir. 1994))); see also United States v. Chavis, 429 F.3d 662,
668 (7th Cir. 2005). Lee opposed the motion. His attorney
denied having suggested that the drugs in the car had been
planted, although the clear suggestion in the first trial as well
as the second was that the cocaine was not present in the trunk
of the car at the time of the first (roadside) search. See R. 176 at
47; R. 181 at 110-11. More to the point, she contended that Lee’s
prior conviction was in truth being offered “to show some kind
of propensity and [to] tip the balance for a jury in this case,
because they were unable to get the jury on the evidence that
they submitted the first time to convict[ ] Mr. Lee.” R. 179 at 9.
Counsel added, finally, that the prior conviction, for simple
possession of crack cocaine, was not similar to or close enough
in time to the charged offense to qualify for admission under
Rule 404(b).
    After hearing the parties’ arguments, the court granted the
government’s motion and admitted the evidence without
explanation: “The bottom line is that the government’s motion
in limine is going to be allowed and the defendant’s motion in
limine is going to be denied regarding the Rule of Evidence
404(b). That will be permitted.” R. 179 at 15. In his opening
statement, the government’s counsel informed the jury that it
would hear evidence that Lee had previously been convicted
of possessing crack cocaine; and counsel explained that Lee’s
conviction “will be presented not to show that just because he
10                                                  No. 12-1718

did it before means he did it this time, it will be presented to
you for the purpose of establishing his intent to distribute the
crack cocaine that he possessed, his knowledge that that crack
cocaine was in the trunk and not there by happenstance, and
to prove that this was not just some mistake that Mr. Lee was
at the wrong place at the wrong time.” R. 179 at 58. Subse-
quently, during the government’s case, the court took formal
notice of Lee’s prior conviction and instructed the jury that it
could consider the conviction on the three subjects the govern-
ment had identified – knowledge, intent, and absence of
mistake – and for no other purpose. R. 180 at 256-57. In its
closing argument, the government reiterated the relevance of
the conviction to Lee’s contention that he had nothing to do
with the cocaine discovered in the car:
       [T]hat is relevant to show his knowledge that
       cocaine is a controlled substance. It is relevant to
       show his intent to possess cocaine at a later date.
       And it is surely relevant to show that he’s not just
       some fool caught up in overzealous law enforce-
       ment. That he’s not just some person in the wrong
       place at the wrong time.
R. 181 at 133.
    At the conclusion of the second trial, the jury convicted Lee
of both the conspiracy and possession charges. Anticipating the
possibility that the Supreme Court might deem the revised
statutory penalties specified by the 2010 Fair Sentencing Act
applicable to defendants, like Lee, who committed narcotics
offenses prior to the FSA’s enactment but were sentenced after
the statute came into effect, the court asked the jury to com-
No. 12-1718                                                              11

plete a special verdict form making findings that were perti-
nent to both the pre- and post-FSA sentencing ranges. As
relevant to the ranges specified by the FSA, the jury found that
the conspiracy in this case involved more than 280 grams of
crack cocaine. That finding triggered a minimum statutory
term of 10 years in prison under the FSA. See § 841(b)(1)(A)(iii).
Furthermore, because Lee had a prior felony narcotics convic-
tion, the mandatory minimum prison term was increased to 20
years. See 21 U.S.C. §§ 841(b)(1)(A), 8511. The district court
ordered Lee to serve the minimum statutory term of 20 years.
                                    II.
    Lee’s lead argument on appeal, and the only one we need
reach, is that the district court abused its discretion in admit-
ting into evidence his 2004 conviction for the possession of
crack cocaine. Although that evidence was nominally admitted
solely for purposes identified as permissible by Rule 404(b),

1
  Lee has separately argued in this appeal that once he successfully
completed the term of supervision to which he was sentenced on his 2004
conviction, the conviction was dismissed as a matter of Illinois law, and
therefore it could not trigger the enhanced statutory minimum term of
imprisonment under section 841(b)(1)(A). However, Lee did not make this
same point in opposing the admission of his prior conviction at trial
pursuant to Rule 404(b). We have found it unnecessary to decide whether
Lee’s prior conviction ceased to be a conviction once Lee successfully
completed his supervision. For the reasons we articulate below, assuming
that the conviction remained cognizable as such for purposes of Rule 404(b),
the district court nonetheless abused its discretion in allowing the
conviction into evidence. And because we conclude that the erroneous
admission of the prior conviction entitles Lee to a new trial, we need not
consider whether the conviction was cognizable for purposes of the
enhanced penalties specified by section 841(b)(1)(A).
12                                                 No. 12-1718

Lee argues that his prior conviction actually was probative of
his knowledge and intent, and the absence of mistake, only in
the sense that it established his propensity to commit cocaine-
related offenses – the very purpose for which Rule 404(b)
forbids the admission of prior wrongful acts. After reviewing
the trial record, we are persuaded that he is correct.
    Rule 404(b) prohibits evidence of a defendant’s other
crimes, wrongs, or acts as proof of his propensity to commit
the charged offense, but allows such evidence for other
purposes, including (but not limited to) motive, opportunity,
intent, preparation, plan, knowledge, identity, absence of
mistake, or lack of accident. Our precedents have consistently
stated that evidence of a defendant’s uncharged, wrongful act
must satisfy four criteria in order to be properly admitted:
       (1) the evidence is directed toward establishing a
       matter in issue other than the defendant's propen-
       sity to commit the crime charged;
       (2) the evidence shows that the other act is similar
       enough and close enough in time to be relevant to
       the matter in issue;
       (3) the evidence is sufficient to support a jury
       finding that the defendant committed the other
       act; and
       (4) the probative value of the evidence is not
       substantially outweighed by the danger of
       unfair prejudice.
No. 12-1718                                                        13

See United States v. Shackleford, 738 F.2d 776, 779 (7th Cir. 1984),
overruled in part on other grounds by Huddleston v. United States,
485 U.S. 681, 108 S. Ct. 1496 (1988); see also, e.g., United States v.
Gulley, 2013 WL 2991794, at *5 (7th Cir. June 17, 2013); United
States v. Howard, 692 F.3d 697, 703 (7th Cir. 2012); United States
v. Vargas, 689 F.3d 867, 875 (7th Cir.), cert. denied, 133 S. Ct. 804
(2012).
    Our recent decision in United States v. Miller, 673 F.3d 688,
697 (7th Cir. 2012), emphasizes the particular importance of the
first and fourth of these factors in the Rule 404(b) analysis.
        The arguments presented in this case suggest that
        admission of prior drug crimes to prove intent to
        commit present drug crimes has become too
        routine. Closer attention needs to be paid to the
        reasons for using prior drug convictions – to
        lessen the danger that defendants like Miller will
        be convicted because the prosecution invited, and
        the jury likely made, an improper assumption
        about propensity to commit drug crimes.
Id. at 696.
    Miller was charged with, inter alia, possessing with the
intent to distribute in excess of five grams of crack cocaine and
with possessing a gun in furtherance of a drug crime. These
charges stemmed from the discovery, in 2008, of crack cocaine,
packaged for distribution, in one of the bedrooms of a house
that Miller shared with others. Although personal effects
belonging to Miller were found in that same bedroom, Miller
contended that in fact he was not staying in that bedroom and
that the cocaine was not his. Pursuant to Rule 404(b), the
14                                                  No. 12-1718

district court admitted into evidence his prior conviction for
possessing cocaine with the intent to distribute in 2000 as
evidence of his intent to distribute cocaine some eight years
later with respect to the case on trial. We concluded that
although Miller’s prior conviction had nominally been admit-
ted for an appropriate purpose–to show Miller’s intent–in
context it was really only relevant as proof of his propensity to
distribute drugs, the very purpose that Rule 404(b)(1) declares
off-limits:
       Here, Miller claimed that the drugs found in the
       shoe box and on the bed were not his, that he was
       in effect an innocent bystander. Witnesses told the
       jury about Miller’s arrest and conviction for
       dealing drugs in 2000. The government defends
       the use of that evidence on the ground that it
       showed his intent to distribute drugs in 2008.
       How, exactly, does Miller’s prior drug dealing
       conviction in 2000 suggest that he intended to deal
       drugs in 2008? When the question is framed this
       way, the answer becomes obvious, even though
       implicit: “He intended to do it before, ladies and
       gentlemen, so he must have intended to do it
       again.” That is precisely the forbidden propensity
       inference.
673 F.3d at 699.
   Miller cautions judges evaluating evidence proffered under
Rule 404(b) to consider first the extent to which a defendant
has genuinely placed at issue the specific matter that the
evidence is being offered to establish. Id. at 696-97. Simply
No. 12-1718                                                       15

because a subject like intent is formally at issue when the
defendant has claimed innocence and the government is
obliged to prove his intent as an element of his guilt does not
automatically open the door to proof of the defendant’s other
wrongful acts for purposes of establishing his intent. Id. at 697.
The court still must weigh the probative worth of the evidence
against its potential for prejudice: thus, for example, “intent
becomes more relevant, and evidence tending to prove intent
becomes more probative, when the defense actually works to
deny intent, joining the issue by contesting it.” Id.; cf. id. at 696
(“Miller has never argued that the bags of drugs–some of
which had price tags attached–were not intended for distribu-
tion.”); id. at 698 (“[Miller] did not argue that he intended to
consume rather than sell the drugs, or that he lacked knowl-
edge of cocaine or how to sell it.”). Conversely, when the
defense theory of the case has nothing to do with intent–when,
for example, the defendant flatly denies that the drugs were
his, as Miller did–other crimes evidence offered to establish his
intent will have much less relevance, such that its probative
worth is more likely to be outweighed by the inherent risk of
prejudice that such evidence poses to the defendant. Id. at 698.
    Second, assuming that the proffered other-acts evidence is
relevant on a contested point, the court must consider the chain
of logic by which the jury is being asked to glean the defen-
dant’s knowledge, intent, etc. from proof of his prior misdeeds.
Id. at 697-98. “Unless there is a persuasive and specific answer
to th[at] question … then the real answer is almost certainly
that the evidence is probative only of propensity.” Id. at 699.
This turned out to be true in Miller when we considered how
proof of Miller’s prior narcotics conviction bore on his intent to
16                                                    No. 12-1718

commit the charged offenses: practically speaking, the only
way in which the conviction was probative of Miller’s later
state of mind was in the sense that it established his history of
narcotics dealing and thus the likelihood that he was repeating
his prior behavior as charged in the present case. Id. at 699, 700.
    After finding that Miller’s prior conviction had been
improperly admitted pursuant to Rule 404(b), we went on to
conclude that the error prejudiced him. We stated that the
relevant inquiry in that regard was “whether an average juror
would find the prosecution’s case significantly less persuasive
without the improper evidence.” Id. at 700 (citing United States
v. Hicks, 635 F.3d 1063, 1073-74 (7th Cir. 2011)). Although the
government’s case against Miller was strong, it was not
overwhelming. Id. at 700-01. Miller had mounted a “vigorous
defense,” and the government in turn had “attacked the
credibility of the defense witnesses and the defense theory,” id.
at 701. “By piling Miller’s prior drug conviction on top of what
was otherwise a strong case, the government distracted the
inquiry from what happened in April 2008 and invited the jury
to decide guilt for the wrong reasons.” Id. We therefore
reversed Miller’s conviction and remanded for a new trial.
    With Miller as our template, we turn to the factual context
in which Lee’s prior drug conviction was introduced against
him at trial. His conviction was formally offered as proof of his
knowledge and intent, and lack of mistake. We consider first
whether and in what way there was a genuine dispute as to
any of these subjects at trial, such that the prior conviction was
truly relevant. And we next consider the chain of reasoning by
which the jury was invited to infer Lee’s knowledge, intent,
No. 12-1718                                                     17

and absence of mistake from his prior conviction. For all of the
same reasons that we articulated in Miller, we conclude that
Lee’s prior conviction was improperly admitted in this case,
because it was probative on these topics primarily if not
exclusively in the sense that it demonstrated his propensity to
commit narcotics offenses.
    We begin by noting that the district court, in admitting the
evidence of Lee’s prior conviction, did not engage in an on-the-
record evaluation of the purposes for which the government
offered the evidence, the relevance of Lee’s conviction to those
purposes, or of the prejudice posed by the conviction as
balanced against its probative worth. This is unfortunate for
more than one reason. First, a statement of the judge’s rationale
always facilitates our appellate review of discretionary
decisions like the decision to admit or exclude evidence. See,
e.g., United States v. Knope, 655 F.3d 647, 658-59 (7th Cir. 2011),
cert. denied, 132 S. Ct. 1060 (2012). Having such a record is
especially important in the Rule 404(b) context, given that the
trial judge is necessarily much closer to the case, the evidence,
and the parties’ respective theories, and is therefore better able
to evaluate the ramifications of the proffered evidence and to
determine whether and why that evidence is relevant without
posing an undue risk of prejudice to the defendant. United
States v. Beasley, 809 F.2d 1273, 1278-79 (7th Cir. 1987). Second,
articulating the rationale for admitting other-acts evidence also
helps to ensure that the district judge is genuinely exercising
his discretion and observing the limits of Rule 404(b) by
thinking through the relevance of and the potential prejudice
posed by the proffered evidence. Our cases have long stressed
the need for careful evaluation of other-acts evidence. See, e.g.,
18                                                    No. 12-1718

United States v. Phillips, 401 F.2d 301, 305-06 (7th Cir. 1968);
United States v. DeCastris, 798 F.2d 261, 265 (7th Cir. 1986);
Beasley, 809 F.2d at 1279; United States v. Nagib, 56 F.3d 798, 806-
07 (7th Cir. 1995); United States v. Ciesiolka, 614 F.3d 347, 357-59
(7th Cir. 2010); United States v. Albiola, 624 F.3d 431, 438-39 (7th
Cir. 2010); Knope, 655 F.3d at 658-59. As we stated in Beasley:
       [T]here must be a principled exercise of discretion.
       The district judge must both identify the exception
       that applies to the evidence in question and evalu-
       ate whether the evidence, although relevant and
       within the exception, is sufficiently probative to
       make tolerable the risk that jurors will act on the
       basis of emotion or an inference via the blackening
       of the defendant’s character … .
809 F.2d at 1279; see also DeCastris, 798 F.2d at 265 (“This
delicate balance of probative force against undue prejudice
calls for all of the judge’s skills. The judge must enter the mind
of the jurors and appreciate how a piece of evidence fits … .”).
Certainly the limiting instruction that the court gave in this
case identifies the purposes for which it admitted Lee’s prior
conviction into evidence. See United States v. Wright, 943 F.2d
748, 751 (7th Cir. 1991) (citing United States v. Binkley, 903 F.2d
1130, 1136 (7th Cir. 1990), abrogated on other grounds by Abuel-
hawa v. United States, 556 U.S. 816, 129 S. Ct. 2102 (2009)). But,
as our decision in Miller emphasizes, identifying a facially valid
purpose for the admission of the evidence is where the court’s
duty begins, not where it ends. 673 F.3d at 696-97. When one
looks beyond the purposes for which the evidence is being
offered and considers what inferences the jury is being asked
No. 12-1718                                                      19

to draw from that evidence, and by what chain of logic, it will
sometimes become clear, as it did in Miller, that despite the
label, the jury is essentially being asked to rely on the evidence
as proof of the defendant’s propensity to commit the charged
offense.
    Lee’s defense was quite similar to Miller’s: although the
cocaine was discovered in the trunk of a car that Lee was
driving, Lee maintained that the car was not his (it was not
registered in his name) and Lee posited that the cocaine was
not his either. In effect, Lee, like Miller, was claiming to have
been an innocent bystander. Thus, Lee was not placing his
knowledge or intent into specific dispute by contending, for
example, that he knew there was an off-white, chunky sub-
stance in the car but he did not realize that was what crack
cocaine looked like, or that he knowingly possessed the cocaine
but solely for his own personal use and with no intent to
distribute it. See Miller, 673 F.3d at 696, 698; Hicks, 635 F.3d at
1070; cf. United States v. Harris, 587 F.3d 861, 865 (7th Cir. 2009)
(defendant admitted holding drugs, but contended that he did
so for someone else with no intent to distribute drugs himself).
Nor was Lee claiming to have made a mistake in the usual
sense. He was not suggesting, for example, that he had
grabbed someone else’s bag (in which the cocaine was discov-
ered) and put it into the trunk of the car thinking it was his. Lee
effectively did posit that he was in the wrong place at the
wrong time, as the government points out – that is the gist of
any innocent bystander defense – but he did not contend that
he took some action inadvertently or unwittingly. See Hicks,
635 F.3d at 1070 (“Hicks never contended that he did not know
that the substance for sale was crack cocaine or any other
20                                                   No. 12-1718

controlled substance.”); Chavis, 429 F.3d at 673 (Cudahy, J.,
concurring) (citing “I thought they [the drugs] were cough
drops” as an example of a defense of mistake). To the extent
the government was offering the evidence in order to prove a
lack of mistake on its part, rather than Lee’s, this was not a
proper ground for admission under Rule 404(b). As the Sixth
Circuit has explained:
       [A]bsence of mistake “on behalf of the govern-
       ment” is not a legitimate basis to admit other acts
       evidence under Rule 404(b). Rather, it is a restate-
       ment of the primary reason for which the evidence
       is not admissible; that is, to suggest that the defen-
       dant is guilty (the government is not mistaken)
       because he committed the same or other crimes
       before.
United States v. Merriweather, 78 F.3d at 1070, 1077 (6th Cir.
1996); see also United States v. Webb, 548 F.3d 547, 548 (7th Cir.
2008) (“As for ‘absence of mistake’: how does a conviction
show this except via the prohibited inference that someone who
distributes drugs once is likely to do it again?”) (emphasis in
original).
    So in all three respects–knowledge, intent, and absence of
mistake – the 404(b) evidence had limited relevance (and in the
case of mistake, none) to begin with. Lee did not pursue the
type of defense which would have raised particular ques-
tions–about what he knew, what his purpose was, and whether
his proximity to the cocaine was inadvertent–that his prior
cocaine conviction might help the jury to answer. Certainly, by
denying that he had anything to do with the cocaine, Lee
No. 12-1718                                                     21

required the government to prove each and every element of
the charged offenses, among them that Lee knowingly pos-
sessed cocaine with the intent to distribute. But as we empha-
sized in Miller, the government’s routine obligation to establish
something like a defendant’s intent does not automatically
open the door to Rule 404(b) evidence. 673 F.3d at 697. A court
still must consider not only the extent to which a particular
subject is genuinely in dispute, but also whether and how the
proffered evidence of a defendant’s prior misdeeds sheds light
on that subject. Id. at 697-99. It is to these questions which we
now turn.
     When we consider how Lee’s prior conviction would have
factored into the jury’s evaluation of the charges in this case,
there is a threshold point to be made about the nature of the
prior conviction. As in Miller, Lee’s prior conviction was
offered to establish his intent. But, in contrast to Miller, Lee’s
prior conviction was for straight possession of crack cocaine,
not possession with the intent to distribute. That being the case,
it is not obvious how the prior conviction would shed light on
Lee’s intent. Miller recognizes that a prior conviction for
possession with the intent to distribute might help to show that
his later intent vis-à-vis the controlled substance in question
was likewise to distribute it rather than to keep it for his
personal use. 673 F.3d at 698; see also Hicks, 635 F.3d at 1070;
Chavis, supra, 429 F.3d at 668 (citing United States v. Jones, 389
F.3d 753, 757-58 (7th Cir. 2004), judgment vacated on other
grounds, 545 U.S. 1125, 125 S. Ct. 2948 (2005), and United States
v. Puckett, 405 F.3d 589, 596 (7th Cir. 2005)). Lee’s prior convic-
tion for possession only does not serve that purpose. Perhaps
there is another chain of logic by which it might shed light on
22                                                 No. 12-1718

his intent. But if so, the government never articulated it; the
government simply argued, without elaboration, that the prior
conviction established his intent five years later. This alone
raises the possibility that the real relevance of Lee’s prior
conviction lay in its proof of his propensity to commit cocaine-
related offenses. See Chavis, 429 F.3d at 673 (Cudahy, J.,
concurring).
    And when we consider what the jury would have surmised
about Lee’s knowledge and intent, and the absence of mistake
on the part of the government, from his prior conviction for the
possession of crack cocaine, it becomes even more clear that his
conviction was relevant only in the sense of establishing his
propensity to engage in cocaine-related offenses. This is
apparent from the government’s argument below for the
admission of Lee’s prior conviction which has been reproduced
in its appellate brief:
       Given the theory of defense, which included the
       suggestion that someone planted drugs in the
       Honda to frame Lee, the defendant’s 2004 convic-
       tion shows that he was familiar with the cocaine
       business and was not some hapless fool mistak-
       enly caught up in some overzealous law enforce-
       ment action.
Gov’t Br. 26 (brackets and internal quotation marks omitted).
This rationale makes plain that the jury was being invited to
infer that because Lee was involved with crack cocaine before,
he must have been so on this occasion as well. As we have
discussed, Lee’s defense did not specifically place his knowl-
edge or intent in dispute by contending, for example, that he
No. 12-1718                                                                 23

did not know anything about how the cocaine trade worked or
that while he possessed the cocaine he had no intent to sell it.
Cf. United States v. Hurn, 496 F.3d 784, 787-88 (7th Cir. 2007)
(defendant conceded knowledge there were drugs and cash in
home he shared with others, but claimed not to know how
much cash or what type of drugs and argued he had falsely
confessed to ownership of drugs and cash out of fear of
retaliation by true drug dealers)2. His was a defense of com-
plete innocence which posited that he had nothing whatsoever
to do with the cocaine discovered in the trunk of the car he was
driving. So when the jury’s attention was called to Lee’s prior
conviction, the inferences it was being asked to draw were not
permissible inferences about his knowledge and intent – for
example, that given his prior contact with crack cocaine, he
knew what crack cocaine looked like or how it was packaged,
or that a quantity as large as the one discovered in the trunk of
the car would be one that he meant to distribute rather than
consume3. Indeed, the government never suggested in argu


2
 The notion that Lee’s prior conviction established his familiarity with the
cocaine “business” is, in any case, a stretch, as the mere fact of his
conviction for possession reveals nothing about how Lee came to possess
the cocaine or what his purpose was.

3
 Nor was this a case in which code words associated with the narcotic trade
were being used and the defendant claimed not to know what they meant,
or the defendant was contending that his seemingly incriminating behavior
(e.g., exchanging small plastic baggies for money at a street corner known
for drug dealing) was in fact not evidence of his intent to distribute
narcotics. See United States v. Betts, 16 F.3d 748, 757-58 (7th Cir. 1994),
abrogated on other grounds by United States v. Mills, 122 F.3d 346, 349-50 (7th
                                                                 (continued...)
24                                                     No. 12-1718

ment to the jury what it might specifically infer about Lee’s
state of mind from his prior experience with crack cocaine.
Instead, as the passage quoted above reveals, the jury was
asked to infer from Lee’s prior conviction that the drugs
discovered in the trunk of the car were not planted there by the
government, that he was not an unwitting driver who had no
idea of what was in the trunk of the car, and that he was not an
innocent person who was unjustly accused simply because he
was discovered in the wrong place at the wrong time. Each
aspect of this theory relies on Lee’s conviction for what it tells
us about his propensity to commit cocaine-related offenses.
Thus: (1) It is unlikely that the government (or anyone else)
planted the cocaine in the car, because Lee committed a
cocaine-related offense before. (2) It is unlikely that he was
ignorant of the cocaine in the trunk, because he has been
convicted of possessing cocaine previously. (3) And it is
unlikely that he was so unfortunate as to be a “hapless fool” in
the wrong place at the wrong time, because he has possessed
cocaine before and therefore likely was not an innocent
bystander on this occasion. The fact that Lee had some famil-
iarity with crack cocaine (if not the cocaine “business”) as
demonstrated by his prior conviction does not demonstrate
that the cocaine was not planted in the trunk of the car, that
Lee knew it was there, and that he was not an innocent
bystander, except as evidence of his propensity to commit
cocaine-related offenses: he did it before, so he must have done
it this time as well. See Miller, 673 F.3d at 699; Jones, 389 F.3d at


3
 (...continued)
Cir. 1997).
No. 12-1718                                                     25

757; United States v. Betts, supra n.3, 16 F.3d at 758-59; see also
Chavis, 429 F.3d at 673 (Cudahy, J., concurring) (“The prior
convictions tell the jury in fairly blatant terms that a defendant
is not to be believed when he says the drugs were not his
because he has done it before.”).
    The limiting instructions that the court gave, both when the
prior conviction was admitted into evidence and in the final
jury instructions (and, for that matter, the prosecutor’s own
observation in opening statements that the conviction was not
being admitted to show “that just because [Lee] did it before
means he did it this time,” R. 179 at 58), did not obviate the
problem. The instructions advised the jury that it could
consider Lee’s prior conviction only insofar as it bore on Lee’s
“knowledge, intent, and absence of mistake,” but as we have
discussed, the only sense in which the conviction was proba-
tive of those subjects was as proof of his propensity to commit
the charged cocaine offenses. The instruction therefore did
nothing to prevent the jury from relying on the conviction for
the very purpose that Rule 404(b)(1) declares off-limits.
    As the government reminds us, a number of our decisions
have cited the defendant’s assertion of an innocent-bystander
defense as a reason (if not the reason) why the admission of a
defendant’s prior bad acts was appropriate, see, e.g., United
States v. Vargas, 552 F.3d 550, 555 (7th Cir. 2008) (coll. cases);
but our holdings in Miller and today in this case should make
clear that neither the nature of a charge nor the nature of a
defense automatically renders proof of a defendant’s other
crimes or bad acts admissible. See also Hicks, 635 F.3d at 1069-
71. A court is always bound to consider how the proffered
26                                                   No. 12-1718

evidence bears on the defense theory, and to exclude the
evidence if rather than supplying insight as to what the
defendant knew or what his purpose was, for example, its true
worth lies in exposing his inclination to commit the charged
offense and in that way to rebut a claim of innocence. At least
some of the cases in which we have cited an innocent-by-
stander defense as justification for the admission of Rule 404(b)
evidence may be distinguished on the ground that the evidence
was indeed probative of the defendant’s knowledge or intent
in a non-propensity way. See, e.g., Vargas, 552 F.3d at 555-56
(prior instances in which defendant transported drugs con-
cealed under loads of produce in refrigerated semi-trailers was
probative of his knowledge that he was doing so on charged
occasion, despite his contention that he was unaware of secret
compartment in which drugs were found); United States v.
Kreiser, supra, 15 F.3d at 640-41 (evidence as to prior cocaine
transactions established that, as with charged transaction,
defendant worked with a partner, partner directed buyer to
retrieve cocaine from automobile linked to defendant, and
defendant “hovered in the background while awaiting the
completion of the deal”; evidence was therefore admissible to
establish defendant’s knowledge, intent, and motive with
respect to charged transaction and to defeat any inference that
his proximity to cocaine on charged occasion was unwitting).
But to the extent that any of our prior cases conveyed an
impression that an innocent-bystander defense necessarily
opens the door to evidence of a defendant’s prior bad acts, it
should by now be clear that any such impression is mistaken.
Miller renewed the admonition we made some 25 years earlier
in Beasley, that a district court must not only identify a purpose
No. 12-1718                                                    27

for which Rule 404(b) authorizes the admission of other-acts
evidence, but carefully evaluate whether and how the evidence
is probative on that point and then assure itself that the
probative value of the evidence is not substantially outweighed
by the risk that the jury will consider the evidence as proof of
the defendant’s propensity to commit the crime charged. 809
F.2d at 1279. Perhaps some of our cases may be faulted for
summarily approving the admission of prior-acts evidence to
defeat a defendant’s contention that he was an innocent
bystander to the charged crime, without making clear how,
other than by propensity, the prior acts tended to establish the
defendant’s knowledge and/or intent. But Miller has returned
us to the path that Beasley and earlier courses charted. If, as in
Miller, the prior acts are nominally admitted for a proper
purpose, but in context are really probative only in the sense
that they establish the defendant’s propensity to commit the
charged offense, then we will find the admission of the
evidence to be erroneous.
    For the reasons we have discussed, the district court
therefore abused its discretion in allowing Lee’s prior convic-
tion into evidence. Rule 52(a) of the Federal Rules of Criminal
Procedure demands that we disregard any error that did not
affect Lee’s substantial rights. This requires us to consider
whether the error affected the outcome of the trial. See, e.g.,
United States v. Wysinger, 683 F.3d 784, 803-04 (7th Cir. 2012)
(quoting United States v. Lee, 413 F.3d 622, 627 (7th Cir. 2005)).
More concretely, we must ask “whether an average juror
would find the prosecution’s case significantly less persuasive
without the improper evidence.” Miller, 673 F.3d at 700; see also
Hicks, 635 F.3d at 1073-74.
28                                                  No. 12-1718

    We conclude that the government’s case against Lee, absent
proof of his prior conviction, would be significantly less
persuasive to the average juror. To be sure, the government’s
case was strong. Hurt, Lee’s customer and alleged co-conspira-
tor, described the four instances in the Summer and Fall of
2009 in which he had purchased crack cocaine from Hurt for
resale. His testimony was corroborated in part by records
which established telephonic contact between Hurt and Lee in
advance of these transactions, and, to a much lesser extent, by
Pickett’s recorded conversations with Hurt (as when Hurt told
Pickett that his supplier had just delivered the cocaine to him).
Moreover, in December 2009, Lee was stopped while driving
a car in which over 50 grams of crack cocaine were later
discovered–with his fingerprint on the wrapping. Nonetheless,
as we have noted, there were openings in the government’s
case that the defense could and did exploit. Because Lee was
never captured on tape discussing the sale of cocaine to Hurt
or handing the cocaine to him, the case depended in large part
on the credibility of Hurt’s testimony. As Lee’s co-defendant,
Hurt suffered from the same credibility deficits of all accompli-
ces turned prosecution witnesses, which Lee’s attorney laid
bare to the jury. He also had a drug problem. Hurt’s testimony
that he did not make money on two of his four transactions
with Lee raised an eyebrow, given that he was in the cocaine
business to supplement his income. More importantly, Lee’s
attorney wrested from Hurt concessions that he “d[id]n’t
remember much of anything at all about th[e] supposed
occasions” on which he had purchased cocaine for Lee and that
“it was the government that helped [him] remember those
occasions … .” R. 180 at 143. For his part, Pickett admitted that
No. 12-1718                                                    29

he initiated the investigation of Hurt and Lee out of a desire to
seek vengeance for Hurt’s perceived betrayal. And the Decem-
ber discovery of cocaine in the automobile Lee was driving
proved a two-edged sword: despite a relatively thorough
search of the car’s trunk at the time of the stop, the cocaine was
not unearthed until a more complete search hours later,
opening the door to Lee’s contention that the drugs were
placed there by someone else after the car was towed. Addi-
tionally, the car Lee was driving was not registered to him, the
trunk was jammed with miscellaneous clothing and other
items, and Lee actually volunteered to the trooper who
conducted the second stop that he had been stopped and the
car towed earlier that same day, a disclosure that was arguably
consistent with his proclaimed ignorance about what was in
the trunk.
    Certainly a reasonable jury could have convicted Lee on
this evidence. But the evidence of his prior conviction, and the
way in which the jury was invited to consider that conviction,
gave the government substantial ammunition to defeat the
defense suggestions that the drugs in the car had been planted
there and that the government’s case otherwise rested on a
witness (Hurt) whose credibility was less than sterling. As we
have discussed, the jury was urged to consider Lee’s prior
conviction as proof that he was not an innocent bystander
discovered in the wrong place at the wrong time–in other
words, the jury was being asked to evaluate the case based not
on what the evidence showed Lee was doing at the time of the
charged offense, but rather based on what his conviction five
years earlier showed about his propensity to commit crack
cocaine offenses. As we put it in Miller, “By piling [Lee’s] prior
30                                                   No. 12-1718

drug conviction on top of what was otherwise a strong case,
the government distracted the inquiry from what happened in
[2009] and invited the jury to decide guilt for the wrong
reasons.“ 673 F.3d at 701. We cannot say that the admission of
the prior conviction was harmless.
   Lee is therefore entitled to a new trial. Lee has raised a
number of other issues related to the special verdict form
submitted to the jury and to his sentence. However, because
we are reversing Lee’s conviction, we find it unnecessary to
decide these issues.
                               III.
    For the reasons set forth above, the district court abused its
discretion in admitting Lee’s prior conviction into evidence at
trial pursuant to Rule 404(b), and the error was not harmless.
We therefore REVERSE the judgment of conviction and
REMAND the case to the district court for further proceedings
consistent with this opinion.
