You need to arrange a meeting with the principal and district administrative staff to discuss the issue. I recommend that if you do not have an attorney at this meeting that you have a witness who will take notes as to what is stated. You cannot "reinstate" your child's reputation but you can insist that appropriate investigative and disciplinary standards be followed. In most communities a parent can challenge a disciplinary action through an appeal process. You need to find out what the process is in your school district. If your child's explanation is confirmed by witnesses, then the principal and teaching staff owe you and your child a written apology and the suspension should be removed from his records.
This is not a substitute for a consultation with a civil rights or education law attorney in your community.