CHICAGO (AFP) - Chicago officials will sue actor Jussie Smollett because he refused to pay costs associated with investigating an alleged hate crime hoax he is accused of orchestrating.

The black, openly gay actor has denied accusations that he hired two acquaintances to stage a racist and homophobic attack in order to gain publicity.

He faced 16 felony counts, which prosecutors dropped in a surprise court hearing late last month - allowing Smollett to walk free after forfeiting US$10,000 (S$13,500) in bond and performing two days of community service - but without admitting guilt.

The case's resolution, which prosecutors said was similar to thousands of other low-level offences handled in Chicago courts, caused widespread outrage and led President Donald Trump to declare federal investigators would look into the case.

City officials had sent a letter to Smollett's lawyers demanding he pay the US$130,000 cost of police overtime for the investigation by Thursday (April 4) or face new legal action.

Smollett's initial report of being attacked in the middle of the night in late January generated nationwide shock and outpouring of sympathy.

The subsequent allegations that he lied led city officials to accuse the 36-year-old of tarnishing Chicago's reputation for personal gain.