LOS ANGELES, SEPT. 4 -- The federal "payola" case against record promoter Joseph Isgro was thrown out of court today by a judge who accused prosecutors of "outrageous government misconduct" in withholding testimony.

U.S. District Judge James Ideman said prosecutors deliberately withheld from the defense contradictory statements by a key witness against Isgro.

The independent promoter was hired by record companies to persuade radio stations to play their songs. Prosecutors allege that Isgro gave cash and cocaine to employees of stations in Texas and California in return for playing certain songs.

The decision also threw out the case against Isgro's two codefendants, convicted cocaine dealer Jeffrey Monka and former Columbia Records executive Raymond Anderson.

Isgro was being tried on 57 counts of racketeering, failing to report the payments to the Internal Revenue Service and other charges.

His trial had been called the radio and record industry's biggest payola case in 30 years. It featured testimony about cocaine and cash stuffed into album jackets and audio cassette cases delivered to radio station executives.

The witness whose statements were at issue in the dismissal motion was Dennis Di Ricco, a former Internal Revenue Service agent convicted of tax conspiracy and obstruction of justice in San Francisco in 1989.

Isgro's lawyers discovered last week that Di Ricco had testified on his own behalf in that trial. They got a transcript of the testimony and found that it contradicted what he told a grand jury that indicted Isgro.

In the San Francisco case, Di Ricco denied any involvement in payola activities with Isgro. In his testimony against Isgro before a Los Angeles grand jury, Di Ricco claimed involvement.

Ideman declared a mistrial and ordered the indictment dismissed.

"The court finds there has been outrageous government misconduct in this case," the judge said.

Friends of Isgro cheered and congratulated him in the courtroom. Outside court, Isgro said he was "relieved and happy."

Assistant U.S. Attorney William Lynch said, "It's regrettable the judge made that decision. We believe he is wrong and we will appeal."

Ideman ruled last week that Justice Department prosecutors improperly withheld from the defense Di Ricco's prior testimony.

Ideman said then that prosecutors violated a long-established rule requiring disclosure before trial of any witness statements that would tend to help a defendant prove his innocence.

Prosecutors admitted in a written brief that they didn't give the defense a transcript of Di Ricco's prior testimony. But they denied that they intended to hide anything.