former probationer refused job

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i just went through a 3 month hiring process with a local fortune 500 company. i received my "welcome to the team call", and turned in my two week notice with my other job. (they already knew it was coming and i had already trained my replacement.) i went in on monday morning for orientation, and filled out my paperwork, received my parking pass and name tag, access cards. as i was leaving to go to the job site, the hr called me into the office and told me my background had just come back. they recended the job offer due to the fact i didn't put i had been arrested for a probation violation 3 1/2 years ago. i did put on the application that i had been convicted originally in 2000 (of bad checks, no less) , and that i completed my probation in jan. of '07. they are considering the violation a new charge and that i falsified my application. is this legal???

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I mean, I know they can recend a job offer at any time for any reason. But does that make it Right??