Dozens of black and Hispanic children who said they experienced racial discrimination at a Philadelphia swimming club in an overwhelmingly white suburb are to share proceeds from its sale.
The Valley Club, in Huntingdon Valley filed for bankruptcy after the allegations.
A settlement, announced publicly by the US Department of Justice, resolves federal, state and private complaints filed against the club.
"No-one may be denied the right to use a swimming pool because of their race or the colour of their skin," Thomas Perez, assistant attorney general for the civil rights division, said.
The children were enrolled in the day camp Creative Steps, which had a contract to use the pool in June 2009. But campers reported hearing racial slurs at the club and Creative Steps director Alethea Wright said some club members took their children out of the pool.
A few days later the club cancelled the camp's eight-week contract and refunded its money. Club bosses said it was because there were not enough lifeguards for the 65 campers, many of whom could not swim.
But club president John Duesler inflamed tensions with a statement saying so many children would "change the complexion" or atmosphere, of the club. He later acknowledged using a poor choice of words.
The club eventually filed for bankruptcy amid protests and negative publicity. It was bought in May 2010 by a Philadelphia synagogue for nearly 1.5 million dollars (£955,000).
Campers will get a portion of that money after court costs are paid. That could leave up to 1.1 million dollars (£700,000) to be shared among 73 people, including children, counsellors and camp directors, the plaintiffs' lawyers Brian Mildenberg and Gabriel Levin said Thursday. "We believe the settlement sends a strong message that racial discrimination against children will not be tolerated," they said.
The settlement, which must be approved by a federal bankruptcy judge, also provides for 65,000 dollars (£41,400) to create a leadership council of campers, their families and former pool members. The group will plan joint educational and recreational opportunities to help promote community healing.