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SACRAMENTO, Calif. -- Federal prosecutors on Thursday announced a settlement with Sacramento mayor Kevin Johnson over allegations that a nonprofit founded by the former NBA star used federal money to pay volunteers for jobs including political activities, running personal errands and washing Johnson's car.

Johnson's St. HOPE Academy must repay nearly $424,000 in return for the government lifting its suspension on future federal grants. Johnson will pay nearly $73,000 of that amount, although the organization will reimburse him when it is able to do so. He also agreed to complete an online class on how to manage federal grants within four months.

Federal authorities last year put Johnson on a list of people forbidden from receiving federal money, and there were concerns that the case could jeopardize Sacramento's access to federal stimulus funds. Johnson's suspension from receiving federal money will be lifted under terms of the settlement.

The mayor, who took office in December, said Thursday he believed the terms of the settlement were excessive but added that it was more important to "put this issue behind us."

"I'm relieved that the cloud is gone and now we can get back to business," Johnson said during a news conference at City Hall. "We are not in jeopardy, moving forward, of not receiving federal dollars."

Acting U.S. Attorney Lawrence G. Brown said the allegations were so serious that a federal inspector general pushed unsuccessfully for criminal charges and suspending St. HOPE from future federal funding. Brown added that prosecutors determined there was no fraud but rather a culture of "sloppiness" in St. HOPE's record-keeping.

Johnson, St. HOPE and the group's former executive director Dana Gonzalez admit no liability or fault but acknowledge St. HOPE "did not adequately document a portion of its expenditures," according to the settlement. Gonzales agreed to pay $1,000 of the settlement and, like the mayor, take an online class on federal grants.

St. HOPE has 10 years to pay its $350,000 share of the settlement, with 5 percent annual interest.

Johnson started St. HOPE in 1989 to revive the neighborhood in which he was raised in Sacramento, one of the city's roughest. It has since grown from a modest after-school program to include charter schools, art and community development programs and an urban peace corps program called Hood Corps.

It is that program that was at the center of the federal investigation into spending of the nearly $847,000 St. HOPE received between 2004 and 2007 from AmeriCorps, which gives college grants to people who volunteer for certain community service programs.

Investigators from the Corporation for National and Community Service, which oversees AmeriCorps grants, said Hood Corps volunteers were assigned cleaning duties and told to run personal errands for Johnson, including washing his car. Investigators said the volunteers also recruited students for St. HOPE Academy, engaged in political activities and went to New York to promote an academy Johnson opened in Harlem.

All those activities violated the terms of the federal grant, the investigators said.

Johnson, a three-time All-Star guard for the Phoenix Suns who retired from the NBA in 2000, was president and chief executive of St. HOPE during most of the period being investigated, according to the settlement.

His organization is credited with turning the failing Sacramento High School into a successful charter school and has helped bring businesses to the Oak Park neighborhood, where Johnson grew up.

During his news conference, Johnson denied personal wrongdoing, blamed unnamed political enemies for the investigation and criticized the federal government for having grant requirements he said are too difficult to follow.

A legal expert hired by the city had warned that the federal decision blocking Johnson from receiving federal funds could make Sacramento ineligible for money from the recently enacted federal stimulus program because Johnson influences city spending.

Johnson denied his status would harm the city. City spokeswoman Amy Williams said Sacramento has received $48 million in federal money since Johnson took office.

Copyright 2009 by The Associated Press