"Ultimately, the Chicago police investigation revealed that you knowingly filed a false police report and had in fact orchestrated your own attack", the letter alleges.
Smollett was allowed to walk free on a "modified plea bargain" that allowed him to avoid trial by serving 16 hours of community service and forfeiting a $10,000 bond.
The lawsuit was filed Thursday in Cook County Circuit Court, 16 days after prosecutors in the Cook County state's attorney's office dismissed all criminal charges against Smollett.
The City says the cost of investigating the case was at least $130,000 in overtime alone, but it wants hundreds of thousands of dollars on top of that to cover attorneys fees and additional expenses.
Actor Jussie Smollett leaves a courthouse last month in Chicago.
Two days later, the Department of Law sent Smollett a letter that threatened legal action if he didn't pay for the overtime costs within a week.More news: Michael Avenatti faces up to 335 years in prison
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Smollett's lawyers rebuffed the demand, claiming that it was Smollett who was owed an apology.
The actor's criminal defense attorney, Mark Geragos, did not immediately respond to a request for comment. Per the suit, the three men then allegedly "coordinated the details of the fake attack" including on agreeing "that Abel would attack [Smollett], but would not hurt him too badly and would give [Smollett] a chance to appear to fight back".
Smollett, best known for his role on the Twentieth Century Fox Television hip-hop drama, has said he has always been truthful about the incident.
"Given that he doesn't feel any sense of contrition and remorse, my recommendation is when he writes check in the memo section [of the check], he can put the word 'I'm accountable for the hoax", Emanuel stated.
The lawsuit lays out a very detailed account of the allegations against Smollett, who told police in the early morning hours of January 29 that he was attacked by two men who hurled homophobic slurs at him, wrapped a noose around his neck and poured an unknown liquid over him. The surprise decision angered Emanuel, who called it a "whitewash" and said the city's reputation "was dragged through the mud" by Smollett. Smollett could also be required to sit for depositions, forcing him for the first time to explain evidence that the city says shows he was lying.
And President Donald Trump described the case as an "embarrassment to America". Johnson told the media at the time that the Osundairo brothers were cooperating with investigators, and that the investigation was pivoting from a hate crime probe into an inquiry into false reporting.