A federal judge has approved a settlement reached last month between the state and the family of an inmate who was brutally murdered in a Utah prison.

Under terms of the settlement, the heirs of Lonnie Blackmon will receive $175,000 in return for drop-ping their $7 million lawsuit against the state.Assistant Attorney General Dan R. Larsen said the state expressly denied any liability in the set-tle-ment.

The family filed the lawsuit in 1996, alleging officers at the Central Utah Correctional Facility in Gunnison stood idly by as inmate Troy Kell stabbed Blackmon 67 times.

Kell, 31, who was serving two life sentences for a prior homicide, was sentenced to death for the Black-mon murder.

Blackmon, 32, was transferred from an Arkansas prison to Gunnison in January 1994 after agreeing to drop a lawsuit against Arkansas. He was serving a 16-year sentence for aggravated burglary.

At Gunnison, Blackmon, a black, was placed in a tier that housed violent inmates who had "openly declared their allegiance to the `Aryan Nation,' " according to his family's lawsuit.

On July 6, 1994, an officer left him handcuffed in a common area of the tier, where he was attacked by other inmates. Several inmates held Blackmon down while Kell stabbed him "until he was dead," the suit said.

"While corrections officers watched and videotaped Black-mon's murder, they had at their disposal a high pressure water hose, tear gas and a shot gun," the suit said.

However, the family said the officers did nothing until a SWAT team was finally assembled and deployed, by which time it was too late to save Blackmon, the suit said.

The family sought $2 million in special and compensatory damages and $5 million in punitive damages. But the case was settled through mediation on April 15. A motion to approve the settlement was granted this week by U.S. District Judge Dee Benson.

Larsen said the $175,000 settlement includes attorney fees and legal costs, funeral expenses and annuities for Blackmon's two daugh-ters, Codi and LaTrese. The 12- and 13-year-old girls, both honor students in Arkansas schools, will receive a monthly stipend for college expenses after they turn 18.