A federal judge in Brooklyn ordered the release yesterday of two men convicted of 2003 racketeering murder charges despite prosecutors’ assertions that both men are killers.

Carmine Polito and Mario Fortunato, who still face charges of lying to investigators, are expected to walk out of prison today.

Their release follows an appeals court decision last week finding a lack of evidence that a fatal shooting at a Greenpoint social club in 1994 was related to mob business and therefore part of a racketeering conspiracy.

The ruling by the 2nd Circuit Court of Appeals did not absolve either man, who are both alleged Genovese crime family associates, of murdering Sabatino Lombardi. In essence, the 2nd Circuit found that the case involved a personal motive – not a federal racketeering crime.

“These defendants are responsible for the murder they were charged with,” Assistant United States Attorney Paul Weinstein told a judge in a last ditch appeal to keep the two men in prison. He called the two defendants “a danger to the community.”

U.S. District Judge I. Leo Glasser said the 2nd Circuit’s decision, which lawyers say amounts to an acquittal, left standing only charges that the two men made false statements to investigators.

“What I really have before me is a very significant change of circumstances,” Judge Glasser told a courtroom packed with family members of both of the victim and the defendants. “To continue to incarcerate and detain these defendants…I think does not serve the interest of justice.”

Judge Glasser suggested yesterday that the case should have been brought in state court. Federal prosecutors have not yet decided what to do next, and it is unclear whether the Brooklyn District Attorney’s office could or would bring murder charges against the two men in state court.

A lawyer in the case said a state murder charge is “theoretically possible,” but neither the defense nor the prosecution believes a state case is likely. A spokesman for Brooklyn District Attorney Charles Hynes said yesterday that his office will consider the matter.

After Judge Glasser’s decision, the Lombardi family huddled together in the hallway, confused and distressed.

“They weren’t innocent people. They were mis-charged,” Lombardi’s sister, Assunta Rozza said. “And everybody needs to know they’re not innocent.”

“It’s disgusting what happened… everything seems disgusting,” Lombardi’s mother, Pasqualina Lombardi said. “When you lose a son, you feel it in all your bones, all your soul.” The family took a slither of comfort in the fact that the two men still remained in custody after the hearing.

Both Mr. Fortunato, who owned a bakery, and Mr. Polito, who owned a pizzeria, had been serving life sentences.

The men were convicted of ambushing Mr. Lombardi and his cousin Michael D’Urso during a card game. Prosecutors argued that the double shooting was a hit to eliminate a gambling debt and advance the men’s standing in the Mafia.

Mr. D’Urso was critically wounded but survived the shooting and later testified at the two men’s trial. Mr. D’Urso also cooperated with the government in cases against numerous Genovese family members.

Yesterday, defense lawyers said that the two men did not commit the murder.

One of Mr. Fortunato’s three brothers said that Mr. Fortunato always worked in the family bakery and never associated with the Mafia. He said his brother was charged with murder because “he’s Italian” and “played cards.”

“We’re happy and we’re mad because he never should have been here,” Michael Fortunato said. “They tried to build a case from zero.”

Mr. Polito’s wife and family declined comment yesterday. In court, a lawyer for Mr. Polito rejected prosecutors’ argument that his client was a flight risk.

“The time has come to allow them to return to their families as the government decides how to proceed and if to proceed,” defense lawyer Gerald McMahon told the judge.

The two men each were released on $1 million bail. Both men were placed on home detention and must wear ankle bracelets so their whereabouts can be monitored electronically.

Judge Glasser said he would revisit the bail issue depending on what if any action is taken by the 2nd Circuit.

Prosecutors now must considering a number of options. They can try the two men on the remaining charges of making false statements. They also can ask the appeals panel to reconsider or ask for a hearing before the full 2nd Circuit.

“Their case is in a shambles,” said Diarmuid White, who represents Mr. Polito.

Mr. White said that his client faces a maximum of five years on each of the two remaining false statement charges. He said that the sentence on both charges likely would come to less than two years, which is the amount of time Mr. Polito already has served in prison.