The Justice Department sued Sterling in August 2006 for allegations of housing discrimination in the Koreatown area of Los Angeles. Other defendants were Sterling's wife, Rochelle, and the Sterling Family Trust.

The defendants allegedly made statements to employees indicating that African-Americans and Hispanics were not desirable tenants.

Court filings indicated that Sterling rented to fewer blacks and Hispanics in Koreatown than would be expected based on demographics, according to the Justice Department.

In settling the lawsuit, however, the defendants denied any liability.

Robert Platt, an attorney for Sterling and the trust, issued a statement saying his clients denied any acts of discrimination.

"The fair housing attorneys could not identify a single individual who was wrongfully denied the right to rent an apartment," he said. The trust has a zero-tolerance policy regarding housing discrimination, he said.

However, insurers for the trust decided it was cheaper to settle the case than to keep fighting, Platt said. Those insurers will cover the settlement.

Sterling manages 119 apartment buildings with more than 5,000 apartment units in Los Angeles County.

"Housing is a basic human need, and yet decades after passage of the Fair Housing Act, far too many still encounter barriers like discrimination," said Thomas Perez, assistant attorney general for the civil rights division.

"The magnitude of this settlement should send a message to all landlords that we will vigorously pursue violations of the Fair Housing Act," he said.

The settlement, which will be considered by a Los Angeles federal judge, also covers two related lawsuits by former tenants at one of the Sterling properties. In those cases, a black family and an interracial family with children contended that private yards that had been part of their apartment were demolished because of their race, the Justice Department said.

Under the settlement, Sterling and the other defendants would pay a $100,000 civil penalty to the government and would pay $2.63 million into a fund to pay monetary damages to tenants who were harmed.

The Justice Department's previous record settlement for discrimination in the area of rental housing was $2.2 million in a 1996 case.

Four years ago, Sterling agreed to pay an undisclosed sum and nearly $5 million in attorney fees to settle an unrelated 2003 lawsuit that claimed he tried to drive non-Korean tenants out of apartments he bought in Koreatown. The lawsuit was brought by the nonprofit Housing Rights Center and 18 other plaintiffs.

That ruling came two weeks after a jury found in Sterling's favor in a lawsuit filed by a former property manager, Sumner Davenport, who claimed he sexually harassed her. Davenport also alleged that Sterling's companies had racially prejudiced employment and housing practices.

Sterling, the Clippers and the NBA are being sued by former Clippers general manager Elgin Baylor, who claims he was forced out of his job a year ago by age and racial discrimination. The team said he resigned. Baylor, a 75-year-old Hall of Fame player who is black, was the team's GM for 22 years.

Sterling is best known for presiding over the Clippers, who won just 19 games last season and have had two winning seasons in the last 30 years.