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New York • Prosecutors dropped a criminal charge against the playboy grandson of the Italian founder of Fiat Automobiles accused of falsely claiming he was being held against his will by an escort in New York City.

The Manhattan district attorney's office said Wednesday that it had declined to prosecute Lapo Elkann and had no further comment. The 39-year-old scion was arrested outside a public housing project in November after his family contacted police, telling them Elkann had demanded $10,000 from them to "guarantee his safety," officials said.

But investigators believe Elkann concocted the whole story and made up the false imprisonment tale after he ran out of money following a two-day drinking and drug binge with the escort.

Prosecutors' decision to drop the case reinforced "the faith I have always placed in American justice," Elkann said in a statement provided by his publicist, Alessia Margiotta Broglio.

"This has been a difficult period for me, but it has also given me time to reflect quietly upon what happened and also about the future," he said.

His attorney, Randy Zelin, said he presented information to prosecutors, who did an exhaustive review before determining no crime had been committed.

"We are very fortunate the district attorney listened to us, and conducted a thorough investigation," said Zelin.

Elkann, who was born in New York City, is the grandson of Gianni Agnelli, who for decades ran Turin-based Fiat Automobiles SpA and its affiliated companies. He is part of the shareholding family but has no role in the company.

Elkann made headlines in Italy in 2005 after he was hospitalized for a drug overdose in the Italian city of Turin. He told an Italian TV interviewer two years later that his past cocaine use had been a "mistake."

In recent years he has focused on design, with his Italia Independent company most famous for carbon fiber sunglasses. He also has designed furniture and collaborated on a Gucci design for the new Fiat 500.