In case 3 of the first game, it was discovered that Jack Hammer stole the Steel Samurai costume, and was wearing it when he walked over to Studio 2. According to Cody, he ran into someone dressed as the Evil Magistrate, and they fought, with the Steel Samurai somehow losing.
However, not many people were in the studio that day. So who did Cody see defeat Jack Hammer? It's hard to believe that Sal Manella or Dee Vasquez could have done it. And there seems to be little reason for anyone to dress up as the Evil Magistrate in the first place. At the same time, it also seems unlikely that Cody would make up a story about the Evil Magistrate defeating the Steel Samurai. So what really happened?