NEW YORK — Robert Levy, the mayor of Atlantic City, N.J., who went missing for two weeks after being accused of lying about his military record, resigned Wednesday, his lawyer said.

Attorney Edwin Jacobs said that the mayor had been undergoing treatment for substance abuse and mental health issues since city officials last heard from him Sept. 26.

“Mr. Levy has concluded that public confidence is so eroded … that the only responsible action is to step down,” Jacobs said.

Levy had been taking medicine to treat back pain and post-traumatic stress disorder he developed from his war service. Jacobs said Levy’s problems had been exacerbated by a federal investigation into his military background — launched after the Press of Atlantic City reported that the mayor had not been a member of the Green Berets, as he has claimed.

Officials have been looking into whether Levy, 64, lied about his service in order to increase his veteran’s benefits. The mayor was in the Army for 20 years — serving two tours of duty in Vietnam — and received numerous medals, awards and citations, Jacobs said.

“The pending investigation has called into question two of those awards, neither of which appear to be supported by an appropriate military order,” Jacobs said.

Residents in the seaside gambling resort city had reported seeing Levy drive off Sept. 26 in his city-issued Dodge Durango. After his disappearance, Gov. Jon Corzine asked the attorney general to look into whether Levy had abandoned his office, and a city councilman asked a judge to appoint the council president as mayor pending a new election. The city’s business administrator, Domenic Cappella, has been serving as acting mayor.

The political saga seemed common to many in Atlantic City who have grown accustomed to corruption and suspicion in local government. Four of the p ast eight mayors have been arrested, and one-third of last year’s nine-member City Council is in prison or under house arrest.

On Wednesday, the president of the City Council , William Marsh, was sworn in as acting mayor.

AP-NY-10-10-07 1827EDT

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