Alexander Penley had claimed in a lawsuit he was beaten by police for allegedly attacking a police sergeant during a 2012 confrontation.
The Daily News says Penley said police continued to hound him even after the charges against him were dropped.
The lawsuit said he was arrested again later on a bogus criminal mischief charge that a grand jury refused to indict him on.
The suit said he was jailed again after being arrested in Virginia in 2013 for having an open warrant in New York - even though both cases were closed.
A city law department spokesman says the settlement was in the best interest of the city.