Prosecutor Suspended; Led Probe of Alleged Mafioso

A federal prosecutor who headed a controversial investigation into a reputed organized crime figure’s business ties to MCA Inc. has been suspended from his job and barred from his office at the Los Angeles organized crime strike force, The Times has learned.

Marvin Rudnick, who had been at odds with his Justice Department superiors since 1987 over the Salvatore Pisello-MCA investigation, was notified last Thursday that he has been placed on paid leave pending a decision on whether to fire him, according to knowledgeable sources.

Rudnick was called into the office of strike force chief John L. Newcomer, ordered to hand over his keys to the office and then escorted out of the Federal Building in downtown Los Angeles, sources said.

Justice Department officials refused to confirm the report, calling it a “personnel matter,” and Rudnick’s lawyer said he was warned by department officials in Washington not to make any statement.

“We’ve been, I guess you could say, warned by the Justice Department in Washington not to make any statement about this, and we intend to abide by that,” said the attorney, Michael L. Kadish.

Rudnick, 41, has been the subject of an internal Justice Department inquiry stemming from his handling of a strike force investigation into Pisello’s business dealings with MCA Records from 1983 to 1985.

In September, 1987, MCA lawyers met with top officials of the U.S. attorney’s office in Los Angeles and later hired an influential Washington attorney to contact the top leadership of the Justice Department’s organized crime and racketeering section about Rudnick’s handling of the investigation, which they characterized as irresponsible.

After complaints from MCA that the prosecutor was maligning the company with unsupported organized crime allegations, Rudnick’s superiors reportedly ordered him to limit the investigation to allegations that Pisello had evaded taxes on his income from MCA.

Convicted of Tax Evasion

Pisello, who has been identified by the FBI as a member of New York’s Gambino crime family, was convicted last year of evading taxes on more than $300,000 in income earned in a series of transactions with MCA’s records division. Rudnick tried the case under Newcomer’s close supervision.

None of the MCA executives who dealt with Pisello were charged with any wrongdoing. All said they had been unaware of Pisello’s alleged Mafia ties, which he himself has vehemently denied.

According to a variety of federal sources, the Justice Department’s office of professional responsibility opened an investigation to determine, among other things, whether Rudnick had violated federal grand jury secrecy laws by publicly revealing that top MCA executives had notified him of their intention to exercise their 5th Amendment privilege against self-incrimination if called to testify about the Pisello case.

The office’s findings have not been made public, but sources close to the probe have said the report supported Rudnick on the grand jury secrecy issue. The report did, however, conclude that Rudnick has been insubordinate with his superiors.

On Thursday, sources said, Newcomer handed Rudnick a one-page letter signed by Edward S. G. Dennis Jr., acting assistant attorney general for the department’s criminal division. Attached to the letter was a memorandum to Dennis from David Margolis, chief of the Justice Department’s organized crime unit, which stated, in effect, that Rudnick had not been following orders from Newcomer.

“This is to notify you that you are being placed in a temporary non-duty status with pay effective immediately upon your receipt of this letter for the period of time necessary to consider and resolve the accompanying proposal to remove you from federal service,” said the letter, the contents of which were read to The Times.

Rudnick may be entitled to an internal hearing, some sources said, and is expected to seek help from current and former Justice Department attorneys, some of whom have told The Times they believe he is being “railroaded.”

‘Barbaric and Unconscionable’

John DuBois, a former strike force attorney who worked with Rudnick on the Pisello case, said he does not believe Rudnick did anything wrong. “Their action is barbaric and unconscionable,” he said of the decision to suspend Rudnick.

Rudnick has prosecuted a number of high-profile white-collar crime cases during his 13-year government career. He has been a special attorney with the Los Angeles strike force for the last nine years. Rudnick is married to Times staff writer Kathryn Harris.

This story was reported by William K. Knoedelseder Jr., Kim Murphy and Ronald L. Soble.