The incident was supposedly loosely based on the career of Frank Sinatra, who as a young singer was losing his career success, until a career in films opened up mysteriously for him. The rumours are that Sinatra's Mafia connections 'influenced' the studios into letting Sinatra have a star part, and his career was duly resurected.
Nothing was ever proved, either about Sinatra's career path, or the fact that this incident in the novel and film were in any way based on him.
That didn't stop Sinatra from publcicly insuting author Mario Puzo when he saw him in a restaurant.
Full story here -
http://www.trutv.com/.../the_godfather/6.html