In a September 1979 article, New York magazine claimed that Iran's embassy in Washington during the salad days of the shah of Iran was the site of private parties for congressmen fond of opium and prostitutes. Now the man New York said arranged those festivities, Manoutchehr Ardalan, has won an apology from the magazine and a financial settlement his lawyer calls "probably one of the largest of its kind around here."

The parties to the lawsuit agreed in their settlement not to discuss the amount of money New York magazine paid to avoid going to trial. But Ardalan's lawyer, Joe Koonz, says, "We were looking for $500,000," and indicates his client was not disappointed with the final settlement.

Ardalan, a former embassy counselor under former ambassador Ardeshir Zahedi, filed suit in U.S. District Court a year and a half ago asking for $30 million in compensatory and punitive damages. He characterized as "grotesque" charges that he was a member of SAVAK, the Iranian secret police, and that he had arranged dope and sex parties for American legislators.

Had the case gone to trial, many Washington notables might have taken the stand to testify in Ardalan's defense about the lavish parties that made Zahedi the toast of the town until the shah was overthrown. But the case was closed in February, when New York printed a correction that Ardalan, now a Washington international relations consultant, was never connected with drugs, prostitutes or SAVAK.