Lochte still stands against the city of Rio de Janeiro with two other charges. The decision has not yet been published and prosecutors have 15 days to decide whether they will challenge the ruling.
After security footage revealed a very different sequence of events, Lochte admitted to being intoxicated from a night of celebration and said he "over-exaggerated that story" in an interview with NBC and posted an apology on social media. Days later, Rio authorities said during a press conference that the US swimmers had vandalized the Shell gas station's restroom, citing surveillance video footage. His lawyers in the USA and Brazil moved to have the case dismissed, but a three-judge panel in a lower court ruled 2-1 that the charge was legitimate. Lochte's suspension, which ended on June 30, meant he couldn't compete in the USA championships that were the selection meet for the upcoming World Championships in Budapest.More news: BC wildfires: Crews fight fire with fire to protect Williams Lake
The charge against Lochte stems not from telling the exaggerated story to NBC days after returning to the US, but from telling it to Rio police, who triggered an investigation of the incident.
Lochte was charged with false communication of a crime after he exaggerated his infamous August 15 story after a late-night party during the Games.
As details supporting Lochte's account emerged, he picked up new sponsors and took a spot on Dancing with the Stars last fall.
Lochte had previously earned a 10-month suspension from the national swim team, a penalty that has concluded as of July 1, allowing him to return to action.