McDermott had taken a statement from a witness linking Rudenstein's client, Jason Campbell, to the fatal shooting of Akinola Lediju, 20, in a house on Sharpnack Street near Musgrave, on April 7, 1998.
The witness has since recanted.
McDermott, a 21-year veteran, testified that the witness named the 19-year-old Campbell as the killer.
Lediju's body was dumped near Allen's Lane in Fairmount Park, where it was discovered by two hikers.
Rudenstein also accused an admitted prostitute of lying about being threatened by Campbell after the slaying.
The woman said Campbell placed a gun to her head after he fled the house.
Pinocchio may have saved Campbell's life.
After three days of deliberations, the jury acquitted Campbell of first- and second-degree murder and robbery, but could not agree on whether to convict him on third-degree murder and manslaughter charges.
After Common Pleas Judge Steven Geroff declared a mistrial on those charges, Assistant District Attorney Randolph Williams said Campbell will be retried at a later date.
Campbell, of Slocum Street near Germantown Avenue, was returned to prison to await sentencing on a carjacking conviction.
Williams dismissed Rudenstein's Pinocchio theory as nothing more than courtroom theatrics."The Pinocchio doll is just like Rudenstein's entire defense - a work of fiction," said Williams. "These detectives are not going to risk their careers by making up a story about a murder."