By Jessica Dye
NEW YORK, June 7 (Reuters) - The former head of a proposed mosque near the site of the Sept. 11 attacks in New York City and two donors who sued him for allegedly sqandering their contributions on a lavish lifestyle have settled their legal dispute.
The lawsuit was filed in Manhattan Supreme Court by Robert Leslie Deak and his wife, Moshira Soliman, who donated money to the Cordoba Initiative and the American Society for Muslim Advancement, two non-profits founded by Imam Feisel Abdul Rauf to educate the public about Islam.
Deak had accused Rauf of diverting millions of dollars intended for the groups for his own personal use.
On Thursday, Deak and Rauf said they had reached a settlement resolving the claims.
"We are now satisfied that neither (Rauf) nor his wife were involved in any wrongdoing and that the charitable contributions made to the Cordoba Initiative and ASMA were used for proper, charitable purposes," Deak said in a statement.
In 2010, Rauf spearheaded a plan to build a Muslim cultural center and mosque in Lower Manhattan near the site of the World Trade Center attacks. The plan drew opposition from groups who said it was too close to Ground Zero and would be an insult to victims of the Sept. 11 attacks.
Rauf was ousted as the project's chief religious leader in January 2011.
"We are very pleased that our names have been cleared and our good reputation has been restored," the Cordoba Initiative said in a statement regarding the settlement.
The settlement also resolves a separate lawsuit filed in federal court in Washington, D.C., by Cordoba accusing Deak of pushing the initiative to buy an apartment unit from him at an inflated price. Deak and his wife will pay Cordoba $1.35 million as part of the settlement, according to the parties' statement.
"We are pleased that this unfortunate episode is behind us and we look forward to continuing our important work of creating mutual understanding between people of all faiths," Rauf said in a statement. (Reporting by Jessica Dye; editing by Andrew Hay)