Republican candidate Bill Simon's quest to become California governor has taken another hit from inside his own campaign.

"Our campaign made a mistake, myself included. I'm the candidate and I take responsibility," the wealthy businessman and political novice said this week in a candid press conference over bad information.

Trailing in the polls and running short of time and money, Simon had hoped a photo of Democrat incumbent Gov. Gray Davis would be his magic bullet. The photo showed Davis receiving a check from the head of California's Organization of Police and Sheriffs, which endorsed Davis in 1998 in his bid to become governor.

Early in the week at the only debate between the candidates, Simon suggested the photo was proof that Davis, whose aggressive fundraising has come under scrutiny, had broken the law by accepting a contribution in a state office.

"Photographs don't change. They don't lie. That photograph is one of the basis of evidence," Simon said.

Just one problem, the photo was taken in Los Angeles, 400 miles from Davis' lieutenant governor's office.

The former COPS official pictured with Davis blasted his old group and Simon's campaign for failing to do the most basic fact-checking before making this accusation.

"I don't understand why somebody didn't pick up the phone and at least call me, to say 'Where was this picture taken?'" said former COPS head Al Angele.

What makes the episode even more troubling for Simon is his ad campaign touting his legal expertise.

"I was a federal prosecutor under [former New York Mayor] Rudy Giuliani," a television spot boasts.

In a radio interview, Davis got in his own dig.

"As a former prosecutor, he should certainly be embarassed, and if he had any sense of honor he should drop out of the race."

The photo-flap is just latest misstep in Simon's campaign.  It follows on the heels of controversial staff changes, the bungled release of his tax returns, and his shifting position on gay rights.

Republican insiders worry that Simon's problems might hurt other GOP candidates throughout the state. And while neither Simon nor Davis are popular among voters, the most recent polls give Davis a 7-10 point lead, a margin that many believe will grow thanks to this latest debacle.

Fox News' Claudia Cowan contributed to this report.