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Where did this purportedly happen? What state, city?
Some states have concealed weapon laws, which a knife surely is. Some have limits on the length, which the LEO's are claiming was violated. Some have limits on where you can carry, or whether it can be concealed. Interestingly, though, LEO's are claiming he's got a concealed weapon and yet they knew he had it because it wasn't concealed. Depending on the true circumstances and facts, he might or might not have a case for unlawful arrest. Seems, though, if it wasn't concealed or over-length and the state/city statutes support that, then he's got a case.
What to do about financing a legal challenge? The tips offered above might be a good place to start.
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Your best weapon is your brain. Don't leave home without it. 
Thoughts: Justifiable self defense.
Explain: How does disarming victims reduce the number of victims?
Deal with evil through strength. Affirm the good in Man through trust.
NRA. GOA. OFF.
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