The watchdog group Committee of Seventy yesterday condemned the formation of a so-called "527" committee to attack Democratic mayoral candidate Tom Knox's record, calling it a "brazen attempt to avoid the city's campaign-finance law."

This is the first mayoral election with campaign-contribution limits, but they don't apply to Knox's spending from his own fortune.

A group called the Economic Justice Coalition for Truth plans to raise funds outside the limits to buy television ads criticizing Knox. Such groups are called 527s after Section 527, covering political groups, in the IRS code.

Committee of Seventy's chief executive, Zack Stalberg, called the formation of a group to focus on one candidate "dangerous." "One devastating negative ad at the right moment can really change the course of the campaign," Stalberg said.

But former Councilman Ed Schwartz, who attended yesterday's news conference sponsored by the group, said the 527 is one remedy for the imbalance of resources in the campaign that favors Knox.

"We have a interesting campaign-finance structure here now that sets serious limits on people who don't have money and no limits on people who do," Schwartz said. *