A ritzy Long Island town has agreed to pay $3.95 million and approve a mosque’s expansion just weeks after admitting to inventing a fake grandmother to block the project in court.

The settlement, filed in federal court this week, ends a contentious legal battle between Muslims on Long Island Inc. and the wealthy North Shore town of Oyster Bay in a case that drew scrutiny from the Justice Department and exposed how Bethpage officials allegedly weaponized zoning laws and even manufactured testimony to kill the project.

Under the agreement, the town will green-light the Masjid Al-Baqi mosque’s submitted plan to demolish two one-story buildings and build a larger house of worship, repeal a 2022 parking law that more than doubled space requirements for houses of worship, and pay nearly $4 m

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