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A charity founded to grant dying children their last wishes has agreed to pay the state $50,000 and go out of business to settle accusations that it misused funds, the state attorney general announced Monday.

The husband and wife who founded the Genie Project were accused of receiving excessive salaries, giving themselves loans, leasing a Cadillac, paying the rent on their home and even renting an X-rated movie with the charity's money.Under the agreement, Michael and Suzanne Bates admitted no wrongdoing and agreed never to hold any office or directorship in a Connecticut charity, according to state Attorney General Joseph I. Lieberman.

The agreement was entered in the form of a judgment in Waterbury Superior Court on July 7 and final notice was received last week at the attorney general's office, Lieberman said. A lawsuit filed on Sept. 12, 1985 accused the couple of violating state charity laws.

Michael Bates has paid $18,259 to the state Consumer Protection Department. Another $5,298 has been seized from various banks, Lieberman's office said.

Suzanne Bates will pay $24,259 to the state over 122 months, and $5,000 worth of computer equipment will be turned over to the Consumer Protection Department, Lieberman's office said.

The Bates also were put on probation for two years in a criminal case brought by the attorney general. They had been charged with providing false information to the Consumer Protection Department.

The two couldn't immediately be reached for comment. There is no telephone listing for either Bates. Their attorney, Hugh Keefe of New Haven, wasn't in his office Monday morning, his secretary said.