Ojore Lutalo, 64, filed a suit against La Junta after he was wrongfully jailed on suspicion of terrorist threats. The city's insurance carrier will pay him an undisclosed amount. (Ed Andrieski, The Associated Press)

The city of La Junta's insurance carrier will pay an undisclosed amount to Ojore Lutalo, a New Jersey passenger on an Amtrak train who was wrongly jailed after another passenger mistook his phone conversation for terrorist threats.

Lutalo filed suit in U.S. District Court in Denver against the city of La Junta, Police Chief Todd Quick and Sgt. Shawn Mobley, claiming Mobley lied in an arrest affidavit to justify the charge against him.

The terms of the settlement say the city does not admit liability and that the amount of money paid to Lutalo is to remain confidential.

Bill Jackson, La Junta's assistant city manager, said Monday the city does not have to publicly disclose the amount because it was paid by the city's insurance company and not the taxpayers.

Lutalo was offered $20,000 early on in the suit, but declined to settle for that amount, said his attorney, Francisco Martinez.

The city has also agreed to submit a letter to authorities in New Jersey and Colorado that says Lutalo's arrest was based on misinformation.

On Jan. 26, 2010, Lutalo was arrested on suspicion of endangering public transportation while headed home to New Jersey after attending the Anarchist Book Fair in Los Angeles.

Amtrak called the La Junta police after a conductor said a Missouri couple on board thought they overheard Lutalo making statements about bombing the train and al-Qaeda.

But other passengers sitting near Lutalo told police they didn't hear him say anything threatening, Lutalo said in his lawsuit. La Junta police did not include those statements in their reports and arrest papers.

The lawsuit also says Mobley filed a report that says Lutalo was born in Nigeria even though he is an American born in New Jersey.

The district attorney declined to file a case against Lutalo, citing a lack of evidence, but Lutalo was in custody for three days.

The incident occurred shortly after the Nigerian bomber attempted a terrorist attack on an airplane Christmas Day 2009, and Martinez believes the hysteria surrounding that case led to Lutalo's arrest.

"He ran into this perfect storm," Martinez said.

Lutalo already had notoriety because he spent 28 years in prison for getting into a police shootout in 1975 and another shooting with a citizen in 1981.

While in prison, he pushed for reforms that led to his release in August 2009.