Earlier this week, after the beauty queen and the pageant dropped their lawsuits against each other and agreed to settle their differences, Prejean demanded more than a million dollars during settlement negotiations. She sued the organization in August for libel, slander and religious discrimination, accusing pageant organizers of telling her to stop mentioning God even before her controversial remarks against gay marriage, or as she called it during the Miss USA pageant, sparking a firestorm of criticism, "opposite marriage."
In response, pageant officials filed a countersuit asking to be paid back the $5,200 they shelled out for her breast implants prior to the Miss USA competition.
But now the pageant isn't getting that money back and Prejean's not pocketing any of the millions she wanted.
TMZ.com reported that Wednesday, after a lawyer for the pageant presented Prejean with a racy sex tape she made, the beauty queen backed away from her demands. TMZ.com reports that all the pageant will pay is approximately $100,000 to Prejean's lawyers and publicist.
Reached by ABCNews.com, Prejean's publicist declined to comment on TMZ.com's report.
It's the latest slide in a long downward spiral Prejean's endured since the 2009 Miss USA pageant in April. In June, she was fired from her gig as Miss California USA by the master axer himself, Donald Trump, who co-owns the Miss USA organization and initially saved Prejean from losing her crown when criticism about her "opposite marriage" comment first erupted.
"This was a decision based solely on contract violations including Ms. Prejean's unwillingness to make appearances on behalf of the Miss California USA organization," executive director Keith Lewis said in a statement sent to ABCNews.com in June. "After our press conference in New York we had hoped we would be able to forge a better working relationship. However, since that time it has become abundantly clear that Carrie is unwilling to fulfill her obligations under our contract and work together."
"I told Carrie she needed to get back to work and honor her contract with the Miss California USA Organization and I gave her the opportunity to do so," Trump said in the statement. "Unfortunately it just doesn't look like it is going to happen and I offered Keith my full support in making this decision. Carrie is a beautiful young woman and I wish her well as she pursues her other interests."
Timeline of Carrie Prejean Controversy
Since the question-and-answer session from that pageant that thrust her into the spotlight, Prejean's story has evolved so fast that it's hard to keep track of all the details. This should help clear things up. Below, a timeline of the controversy surrounding Prejean, from the Miss USA 2009 pageant to June.
April 19: Pageant judge Perez Hilton asks Prejean, "Vermont recently became the fourth state to legalize same-sex marriage. Do you think every state should follow suit, why or why not?" Prejean replies, "I think it's great that Americans are able to choose one or the other. We live in a land where you can choose same-sex marriage or opposite marriage. And you know what? I think in my country, in my family, I think that I believe that a marriage should be between a man and a woman. No offense to anybody out there, but that's how I was raised."
April 19: Following the pageant, Hilton posted a video on his blog condemning Prejean's answer and calling her a "dumb b****." He later apologized in the blog, offering to take Prejean out for coffee and a "talk."
April 20: Hilton tells ABCNews.com, "I was floored. I haven't said this before, but to her credit, I applaud her for her honesty. However, she is not a politician, she's a hopeful Miss USA. Miss USA should represent everyone. Her answer alienated millions of gay and lesbian Americans, their families and their supporters."
April 20: Prejean defends her comments via multiple media outlets and tells "Access Hollywood" that her sister is a gay activist. "My sister is a second lieutenant in the Air Force and she is a gay rights activist," Prejean says, adding that her sister is not gay. "She supports gay people, she supports gay marriage. My beliefs have nothing to do with my sister or my mom, or whatever."
April 26: Prejean visits churches, including San Diego's The Rock Church, which was active in the campaign to pass a constitutional ban on gay marriages in California last year, to tell her side of the pageant story. She tells The Rock Church's congregation that pageant officials asked her to apologize to the gay community.
April 27: In response to Prejean's comments, Lewis issues a statement saying, "Given the fact that Carrie Prejean's first act upon returning to California was to headline five services at a church that promotes homosexuality as both unnatural and abnormal, we stand by our concern for her individual image and look forward to a time in the near future when she can put down her personal agenda and assume the responsibilities associated with being Miss California USA."
April 29: Prejean's sister Christina tells ABCNews.com she was surprised the beauty queen called her a gay activist. "I have never even given myself that title. I was kind of surprised that she mentioned it, but I think she wanted to get the point across that our family is tolerant," Christina Prejean says, adding that she only recently got involved in gay rights activism.
April 29: Shanna Moakler, former co-executive director of the Miss California Miss USA pageant, confirms reports that the Miss California organization paid for Prejean to get breast implants weeks before the Miss USA pageant.
Timeline of Carrie Prejean Controversy
April 30: Prejean tells NBC's "Today" show that she's going to Washington to work with the National Organization for Marriage, saying the union between a man and a woman is "something that is very dear to my heart."
May 1: The National Organization for Marriage issues a statement saying that although she appears in an ad on the organization's Web site, Prejean "does not work for the National Organization for Marriage. She is a spokesperson for her own views."
May 4: A topless photograph of Prejean in pink underwear appears on TheDirty.com. TMZ.com claims it also received topless photographs of Prejean but didn't publish them because the beauty queen's representatives said she was 17 years old when the photos were taken.
May 5: Prejean says TheDirty.com and others are trying to belittle her religion, telling The Associated Press the semi-nude photos were released "surreptitiously to a tabloid Web site that openly mocks me for my Christian faith. ... I am a Christian, and I am a model. Models pose for pictures, including lingerie and swimwear photos."
May 6: Representatives for the Miss California USA organization confirm they're investigating whether Prejean violated the 12-page contract all contestants are required to sign before the November state contest. The document prohibits whoever holds the title of Miss California from making personal appearances, granting interviews or making commercials without permission from pageant officials and gives the pageant's directors the right to revoke her crown for breaching any of the document's provisions.
May 6: On "The View," Trump says Prejean's answer to the question of gay marriage posed during the Miss USA pageant was not so far off base. "That's the belief of 70 percent of the people, so it wasn't a horrible answer," he says. "That was her belief and she's taken hard hits. She's more famous because of it. No one is talking about the young woman who won. Nobody knows who she is."
May 11: Prejean's mother, Francine Prejean, tells MomLogic.com, "My daughter is a bright, beautiful, strong woman. ... She was raised in a Christian home. Marriage is between a man and a woman. Now she's being persecuted for speaking her opinion."
May 11: Miss California USA co-directors Lewis and Moakler unveil a new PSA promoting the organization and appoint the pageant's first runner-up, Tami Farrell, the organization's ambassador, effectively negating Prejean's role as the face of the pageant. Lewis asserts he wants to move on from Prejean, "get back to the business of beauty," and have Trump make the call on Prejean's fate.
May 12: Prejean tells Christian radio host Dr. James Dobson that Satan tried to tempt her with a question about gay marriage at the Miss USA pageant.
May 12: Donald Trump announces Prejean will keep her crown.
May 12: More photos of Prejean semi-nude emerge on TMZ.com, as TheDirty.com posts new pictures of her and Olympic champion Michael Phelps. The two are rumored to be dating.
May 13: Moakler resigns following Trump's press conference. "I cannot with a clear conscience move forward supporting and promoting the Miss Universe Organization when I no longer believe in it or the contracts I signed committing myself as a youth," Moakler says in a statement issued by her publicist. "I want to be a role model for young women with high hopes of pageantry, but now feel it more important to be a role model for my children."
June 10: Prejean is relieved of her duties as Miss California USA.