Sacramento Mayor Kevin Johnson threatened to sue the federal government Tuesday if he is not immediately taken off a list of individuals barred from receiving federal funds.

According to Johnson's attorney, the matter has become "extremely urgent" since a legal expert said earlier this month that Johnson's suspension would likely hinder the city's ability to receive federal aid – including millions of dollars in economic stimulus funding.

In a letter obtained by The Bee on Tuesday, the attorneys representing Johnson, St. HOPE Academy and former St. HOPE official Dana Gonzalez wrote that their clients' constitutional rights were violated because they were suspended by the federal Corporation for National and Community Service without a hearing.

The attorneys also wrote that their clients' names were tarnished when the federal agency "levied extremely stigmatizing accusations" against them through press releases and a Web site news advisory that included large red headlines.

Johnson's legal threat was included in a letter sent to William Anderson, a suspension and debarment official with the Corporation for National and Community Service. A corporation spokesman could not be reached for comment.

The mayor's spokesman, Steve Maviglio, said Johnson believes his suspension is "unnecessary and unfair."

"We have continued to work in good faith with the U.S. attorney's office and AmeriCorps, and will explore every avenue possible, including the courts, to make sure that this improper suspension does not affect the citizens of Sacramento," Maviglio said.

According to a probe by the Office of the Inspector General for the Corporation for National and Community Service, Johnson and officials with the nonprofit Hood Corps organization he founded improperly used some of the $807,000 in federal grant money the urban Peace Corps-style organization received between 2004 and 2007.

Authorities placed Johnson and Hood Corps on the federal Excluded Parties List last year – before Johnson was elected mayor – following the preliminary investigation.

Placement on the suspension list was warranted due to the serious nature of the allegations, federal authorities said.

A federal audit of Hood Corps is ongoing.

Soon after Johnson was elected mayor in November, City Attorney Eileen Teichert hired Washington, D.C., attorney Frederic M. Levy – an expert on government contracting and compliance – to determine whether Johnson's inclusion on the suspension list would hinder the city's ability to receive federal aid.

According to a confidential memo from Levy obtained exclusively by The Bee, the city was likely barred from receiving federal funds while Johnson was on the list.

Levy wrote that federal agencies would likely determine Johnson was a "principal" in city financial decisions, a determination that would "prevent the City from obtaining … federal grants, subsidies, or cooperative agreements."

City officials have refused to make Levy's memo public – or release it to media – because they say it contains attorney-client privileged information.

The city has already received nearly $50 million in federal grants since Johnson took office in December. City officials had not been notifying federal agencies of Johnson's suspension but said last week they would begin doing so.

The U.S. attorney's office in Sacramento said last year that the findings turned over by the inspector general did not warrant criminal charges. The U.S. attorney requested additional information and held out the possibility of filing a civil action, pending the results of the audit.

Johnson's attorneys and federal authorities are working on a civil settlement on the case.

Matt Jacobs, Johnson's attorney, said earlier this month he expected any settlement would include the mayor's removal from the suspension list.

Call The Bee's Ryan Lillis, (916) 321-1085.