Jonathan Fleming, 53, walked free in April 2014 when his conviction was overturned by the Brooklyn district attorney after spending nearly half his life behind bars. He had been found guilty of the August 1989 shooting of a friend despite being with his family in Orlando, Florida at the time of the murder.
"Fleming spent nearly half of his life behind bars for a crime that evidence available at the time proved he could not have committed," said New York city comptroller Scott Stringer.
"We cannot give back the time that he served, but the city of New York can offer Jonathan Fleming this compensation for the injustice that was committed against him." Fleming went to hospital to see his dying mother after signing the settlement, his lawyers Paul Callan and Martin Edelman said.
"The swift settlement will enable Jonathan and his family to build a new life without the painful and costly prospect of further litigation," they said in a joint statement. In an interview with the Guardian last year, Fleming said he sat on his prison bed and cried for 10 minutes when he was told he was free.
He walked out of jail with just USD 93 and the clothes on his back, forcing him to move from hotel to hotel, or stay with friends and family while he looked for work. "I feel that I do deserve to be compensated," he told the Guardian in a video interview.
"Because at the end of the day, when it's all said and done, everyone sees that I am innocent." Fleming had a Florida hotel receipt dated August 14, 1989 and time stamped at 9:27 pm, four hours before Darryl Rush was killed in Brooklyn, around 1,000 miles (1,600 kilometers) away.
Fleming's sentence is one of dozens that is being re-examined by a special unit in Brooklyn headed by a Harvard law professor.
Several of the cases being reviewed were investigated by retired police detective Louis Scarcella, suspected of using illegal methods to frame suspects. "No amount of money will ever give him back that time. As Brooklyn district attorney, I'm determined to correct these miscarriages of justice and to prevent them from occurring in the future," he said.