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In ordinary words.
Pay to make a case go away, without saying you did it.
In legal terms.
Settlements commonly disclaim liability; courts and regulators may impose conditions.
Where it stops being legal.
This practice is not categorically legal. Applicable federal, state and local laws, disclosures, procedural protections and the specific facts can make particular conduct unlawful.
General U.S.-focused information. Cases and statutes may have jurisdiction-specific exceptions. This citation may be a general primer; verify the governing primary authority. Not legal advice.