TMZ broke the story ... Clash and Sheldon Stephens entered into a settlement in which Clash agreed to pay Stephens $125,000, but in return the agreement provides the following:

"Stephens agrees that immediately upon execution of this Agreement, his counsel, Andreozzi & Associates, P.C., shall release the [following] statement ... 'He [Stephens] wants it to be known that his sexual relationship with Mr. Clash was an adult consensual relationship.'"

We've learned Stephens has met with lawyers in Los Angeles and told them he was pressured into recanting his allegation and insists he's telling the truth when he says he had sex with Clash when he was 16.

Stephens -- who is now 23 -- is telling lawyers he will gladly forfeit the $125,000 to restore his name. Stephens is saying he was literally crying during the final negotiations and repeatedly said he didn't want to sign.