He knew, just as well as he knows we are sitting here now, that the private presentation of this film on last Tuesday morning was for the purpose of seeing if there was anything objectionable in it. To fit it for such private presentation it was gone over by him with a fine tooth comb, no doubt; but immediately thereafter a sedulous effort was indulged in by him to insert those things which would tend to "excite" and to create a prejudice against Great Britain. This demands an inquiry into the ultimate motives and purposes of this man.
Also, Goldstein's lawyers were unable to argue that his First Amendment rights were being violated, because the Supreme Court had ruled in 1915 that movies lacked such protection. (That has since changed, of course.) The biggest factor, though, was probably anti-German hysteria. Goldstein's father (who'd founded the costume business) was a German immigrant. The film's investors apparently included several Germans. The same Los Angeles Times that had previously praised Goldstein's film subsequently hinted that Goldstein was involved in a plot to blow up U.S. munitions ships.
Goldstein was also Jewish, and anti-Semitism was still the norm among Southern California's (and Washington's) ruling class. After he got out of jail, Goldstein tried to re-establish himself as a filmmaker in the Netherlands, Switzerland, Italy, and England, which refused him a visa. Eventually he drifted to Germany. According to Slide, the last known communication from Goldstein was a 1935 letter to the Academy complaining that "because I can't pay $9 to have my American passport renewed I have been fined 75 marks--and as I consequently can't pay that either--two weeks in jail." Goldstein almost certainly died in the Holocaust.