By Rodrigo, Viga and Gaier

RIO DE JANEIRO Republican U.S. congressman George Santos, who has Brazilian heritage, agreed to settle a lawsuit in which he was accused of bouncing checks to buy clothes in a Rio de Janeiro clothing store over a decade ago, a court in Rio said.

Santos was indicted this week for fraud and money laundering in the U.S., and has faced months of allegations related to lies about his career and history.

He denies the new charges, which he has branded a "witch hunt", and has vowed to fight back.

The Brazil case was shelved in 2011, as the Brazilian courts were unable to reach Santos. However, it reopened after the Republican politician was elected to a seat in the U.S. House of Representatives from New York, allowing the Brazil courts to locate him.

He will pay about 24,000 reais ($4,800) within a month to settle the lawsuit in the Rio de Janeiro court.

Reuters could not immediately contact his lawyer in Brazil.

In the new indictment in the U.S., the 34-year-old Santos has been accused of defrauding potential political supporters by laundering funds to pay for his personal expenses and receiving unemployment benefits illegally while he was employed.

Santos is also accused of making false statements to the House of Representatives about his assets, income and debts. He has resisted calls to resign for lying about his resume.

Republicans control the U.S. House of Representatives by a narrow margin of 222 to 213. Santos has pleaded not guilty and party leaders said he can keep his seat while the case works its way through court.

Santos was released on a $500,000 bail but was ordered to surrender his passport and limit travel. He can return to Washington and vote in Congress, and is due to appear in court next on June 30.

(Reporting by Rodrigo Viga Gaier; Writing by Steven Grattan; Editing by David Gregorio)