                             UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT


                             No. 04-7328



UNITED STATES OF AMERICA,

                                             Plaintiff - Appellee,

          versus


CHARLES ROBERT LUESSENHOP,

                                            Defendant - Appellant.



Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. James C. Cacheris, Senior
District Judge. (CR-02-298; CA-03-458)


Submitted:   June 20, 2005                 Decided:   July 29, 2005


Before MICHAEL, KING, and DUNCAN, Circuit Judges.


Vacated and remanded by unpublished per curiam opinion.


James Warren Hundley, BRIGLIA & HUNDLEY, PC, Fairfax, Virginia, for
Appellant. Thomas Higgins McQuillan, OFFICE OF THE UNITED STATES
ATTORNEY, Alexandria, Virginia, for Appellee.


Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:

            Charles Robert Luessenhop appealed from the district

court’s order denying his 28 U.S.C. § 2255 (2000) motion.              We

previously granted a certificate of appealability on the limited

issue of whether Luessenhop received ineffective assistance of

counsel at sentencing. We denied a certificate of appealability as

to all other claims. Therefore, although the parties briefed other

issues, we will not address them.      On the only issue before us, we

vacate the relevant portion of the district court’s order and

remand for a hearing.

            The district court decided this case without a hearing.

An evidentiary hearing is generally required under § 2255 unless it

is conclusive from the pleadings, files, and records that a movant

is not entitled to relief.     Raines v. United States, 423 F.2d 526,

529 (4th Cir. 1970).    Whether an evidentiary hearing is necessary

is best left to the sound discretion of the district court judge.

Id. at 530.     However, where a movant presents a colorable Sixth

Amendment claim showing disputed facts involving inconsistencies

beyond the record, a hearing is mandated.         See United States v.

Magini, 973 F.2d 261, 264 (4th Cir. 1992).

            To succeed on his claim, Luessenhop must show that his

counsel’s     performance   fell   below   an   objective   standard   of

reasonableness and that his counsel’s deficient performance was

prejudicial.      Strickland v. Washington, 466 U.S. 668, 687-88


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(1984).   Under the first prong of Strickland, we indulge a strong

presumption that counsel’s conduct falls within the wide range of

reasonable professional assistance.             Id. at 689.    To satisfy the

second prong of Strickland, a movant must demonstrate there is a

reasonable    probability    that,   but     for   counsel’s    unprofessional

errors, the result of the proceeding would have been different.

Id. at 694.

          Luessenhop argues that his attorney failed to properly

challenge the loss calculation under the sentencing guidelines.

Luessenhop    engaged   in   a   scheme    to   secure   HUD   (United   States

Department of Housing and Urban Development)-insured mortgage loans

for buyers who could not qualify.          When the buyers defaulted, HUD

paid the mortgages and then resold the property.               The loss amount

was calculated by subtracting the HUD sale price from the mortgage

amount and adding fees incurred.          The loss totalled $223,816.77.

          Luessenhop now contends that HUD engaged in wrongdoing in

obtaining depressed appraisals for the property and selling them

below market value, thus increasing the loss for which Luessenhop

was responsible.    At sentencing, Luessenhop’s counsel argued that

the loss was not reasonably foreseeable to Luessenhop, and the

court rejected that contention under United States v. McCoy, 242

F.3d 399, 404 (D.C. Cir. 2001), which held that, absent fraud on

the part of the Government, the loss calculation from a fraudulent

Small Business Administration loan application should be based on


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the actual sale price of the collateral, not the alleged potential

sale price.      Luessenhop now contends that his counsel focused on

the   wrong    issue   and,    instead,    should   have    argued      that    the

liquidation sales were not arms-length or were the result of fraud

or misconduct.      In such a case, under McCoy, the sale price would

no    longer   be   the    appropriate    amount    to    use    for    the    loss

calculations.       242    F.3d   at   404.    In   support      of    his    claim,

Luessenhop has presented evidence that the appraisals were not

conducted in accordance with HUD regulations or accepted standards.

He states his attorney should have known that HUD sales must be

based on fair market value appraisals and should have requested the

appraisals on the relevant properties.               Had counsel done so,

Luessenhop contends that he could have argued for a lower loss

calculation and that he would have been responsible for a lower

restitution amount.

              In response, the Government contends that, even armed

with the HUD regulations and the appraisals, counsel could have

done no more than he actually did at sentencing.                As stated above,

counsel made the argument that the full extent of the loss was not

reasonably foreseeable to Luessenhop and, thus, should not have

been attributed to him as relevant conduct.              This claim was found

barred by McCoy.          With the evidence now in the record, counsel

could have argued that the HUD sales were not arms-length and were

based on fraudulently depressed appraisals, an exception to McCoy.


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Thus, the factual issue of whether there was fraud is a new issue

based on new evidence that was not raised at sentencing.

          The    Government     next   argues    that   Luessenhop     has   no

evidence that the appraisals were fraudulent and that they may well

be accurate. However, Luessenhop is not required to prove that the

appraisals were fraudulent to be entitled to a hearing; instead, he

need only show that a material issue of fact exists.                Luessenhop

has submitted opinions from licensed real estate professionals that

state that the appraisals were not accurate.            In addition, one of

the buildings was sold for nearly three times as much as the

appraisal, less than three months after the HUD sale.              We find that

Luessenhop’s    evidence   is   sufficient      to   require   a   hearing   to

determine whether the appraisals were fraudulent.

          Finally, the Government contends that Luessenhop cannot

show prejudice.   Luessenhop’s guideline range was calculated based

on a loss of $223,816.77.          His guideline range was twelve to

eighteen months (after an acceptance of responsibility adjustment).

In addition, the court granted the Government’s motion for a

substantial assistance departure resulting in a guideline range of

eight to fourteen months, with an imposed sentence of eight months.

          If Luessenhop’s figures are used, the loss amount would

have been less than half, resulting in a lower guideline range.

See U.S. Sentencing Guidelines Manual § 2F1.1 (1997). Nonetheless,

while Luessenhop arguably could have received a lower sentence if


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his attorney had properly argued his case, he could also have

received a longer sentence, especially if the court declined to

grant    the    downward    departure     motion     or     the    acceptance       of

responsibility adjustment or decided to sentence Luessenhop at the

higher end of the range.

              However,     while    Luessenhop’s     showing        of    prejudice

regarding the prison term may be insufficient to grant a hearing,

we find that Luessenhop is able to make a proper showing of

prejudice      regarding    the    restitution     order.         Luessenhop    paid

$223,816.77 in restitution.            According to the evidence he has

submitted,      absent   his    attorney’s     ineffective        assistance,      the

restitution should have been substantially less. We find that this

substantial differential is sufficient to show prejudice arising

from    his    attorney’s    failure    to     properly   raise     the    possibly

fraudulent appraisals at sentencing.

              Based on the foregoing, we vacate the relevant portion of

the district court’s order and remand for a hearing on Luessenhop’s

claim   that    he   received      ineffective    assistance       of    counsel    at

sentencing.      We dispense with oral argument because the facts and

legal contentions are adequately presented in the materials before

the court and argument would not aid the decisional process.



                                                          VACATED AND REMANDED




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