TMZ: Prejean tape leads to settlement

Beauty queen Carrie Prejean reportedly demanded more than $1 million from the Miss California USA Pageant organization, but quickly withdrew her demands and settled after a pageant lawyer produced a sex tape featuring her, reported TMZ .

According to TMZ the video with Prejean is extremely graphic and has never been released publicly. The celebrity site though stated that they obtained the video months ago, but decided not to post it because it was so racy.

On Tuesday Prejean and the pageant released a joint statement saying that they reached a confidential settlement on dueling lawsuits.

The Associated Press reported that Prejean sued Miss California USA organizers in August for libel, slander and religious discrimination. Prejean was fired in June after pageant officials accused her of missing events, an allegation that she denied. The pageant countersued Prejean last month.

One contentious point that made headlines involved Prejean's breast implants. The New York Daily News reported that K2 Productions, which directs the Miss California USA pageant, filed a lawsuit asking for the return the $5,200 it gave her for breast-augmentation surgery. According to the complaint filed last month Prejean requested the surgery "to be more competitive" at the April 2009 Miss USA pageant and verbally agreed to repay the K2 loan.

The pageant is paying $100,000 for Prejean's lawyers, but she takes nothing in the settlement, TMZ also reported.

Prejean gained national attention after she stated during the 2009 Miss USA Pageant that she believed marriage should be between a man and a woman. She placed as runner-up in the contest, but went on to say that she felt her response cost her the crown. She was quickly asked to appear in a television advertisement opposing same-sex marriage, and became a conservative voice in the country.

In May, Prejean appeared as a fill-in host on "Fox and Friends". She is also featured in the "Great American Conservative Women Calendar" for 2010 .

Semi-nude photos of Prejean , shot when she was 20 and before she entered the Miss California pageant, were publicized in May. Prejean's memoir "Still Standing" is due in bookstores this month.