Carrie Prejean's Alleged Sex Tape Sets Off Settlement With Miss California USA

November 5, 2009 11:27 a.m. EST

Los Angeles, CA (CNS) - Carrie Prejean's settlement with Miss California USA pageant officials has to do with a racy sex tape. Reports have surfaced that the dethroned beauty queen agreed to fold from the suit after she was shown her rated-X home video.

Prejean originally demanded more than a million dollars during her settlement negotiation with the organization, but ultimately walked away with nothing after the pageant's lawyer showed her the video.

TMZ says the video was extremely graphic and has never been released publicly. It obtained the video months ago, but decided not to post it because it was so racy.

The pageant still agreed to pay her lawyers and publicist $100,000, just a fraction of her bills, but Prejean would get nothing.

Meanwhile, her lawyer told RadarOnline.com that they are weighing their legal options, saying someone acted in an "unethical and unlawful manner" by raising the sex tape issue. If there is a breach of contract, they will consider suing for punitive damages.