A ritzy Long Island town that was busted for inventing a “fake grandma” to block a mosque has failed to approve a $4 million court settlement with that would have allowed expansion at the house of worship.

The town of Oyster Bay has broken an agreement with Muslims of Long Island that ended a federal suit and would have greenlighted the Masjid Al-Baqi expansive renovations to its Bethpage facility and paid back $3.95 million in legal fees.

As part of the agreement officials had promised to hold a board meeting where they would approve the settlement within 10 days. But the town abruptly canceled those plans on Thursday night. 7

“Unfortunately, the settlement has fallen apart as the Town repudiated its own agreement,” Rachel Katz, spokesperson for Linklaters attorneys, who are r

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