Nik Dimopoulos’s “only crime was looking Middle Eastern” before he was arrested by police so forcefully that he may have permanent damage to his arm, according to his lawyer, Jeremy King.

The case has renewed anger about racial profiling by Victoria police and has raised questions about their use of force. Dimopoulos, 47, was arrested by the elite Critical Incident Response Team outside the Hares and Hyenas LGBTI bookshop in Fitzroy, a suburb in Melbourne’s north, around 2am on Saturday morning. Police mistook him for a suspect they were pursuing.

Police stormed the garage of the home attached to the bookstore, which is co-owned by Rowland Thomson and Crusader Hillis. King said Dimopoulos ran from the building before the arrest, thinking it was under homophobic attack by an armed gang. A Facebook post by Thomson and Hillis, who were also present during the raid, said police did not identify themselves.

“It’s pretty early days but I can say the two white people weren’t arrested and didn’t suffer injuries, but the guy who is Greek and looks Middle Eastern was,” King said. “It’s hard to get around the racial profiling.”

King said Dimopoulos was still “in a very bad way” and remained in hospital “in the biggest brace I’ve ever seen”. Surgeons do not know if he will recover full use of his arm, which was broken in several places. “He is still very traumatised psychologically,” King said.

Victoria’s anti-corruption watchdog has launched an investigation into the raid, a move which King said he and Dimopoulos welcomed. But he said the Independent Broad-based Anti-corruption Commission (Ibac) needed more powers to run a thorough investigation, not only into Dimopoulos’s case but in other racial-profiling cases. He said the issue came up frequently among the clients he represented.

“I think there’s an issue with Victoria police not improving or changing as there are consistent examples of police misconduct and police brutality and it’s not going away,” he said. “And in my view it won’t go away until there is a proper accountability mechanism in the form of a strengthened Ibac.” The watchdog has been accused of having weak and narrow investigative powers.

The Victorian Police Professional Standards Command is also investigating the arrest. The assistant police commissioner, Luke Cornelius, took the rare step of visiting the Hares & Hyenas bookshop to personally apologise to the owners.

The founding solicitor of the Flemington Community Legal Centre’s police accountability project, Tamar Hopkins, said most victims of racial profiling or police violence never received an apology.

“But if police had have got their target in this case, and arrested a Lebanese gang member in this violent way, we wouldn’t be hearing a word in the media,” she said. “Even though brutal force of this kind is terrifying and unnecessary. But it is also standard in these high-pressure operations.”

Lauren Caulfield, who works with the Abolitionist and Transformative Justice Centre, said she was glad Dimopoulos’s case had sparked outrage, but she said many other cases never attracted attention. Dimopoulos is a well-known and respected figure in the gay community, which has rallied around him.

“But we very regularly hear from people who are targeted because they match the description of suspects and what that means is they look black or racially similar to the suspect,” Caulfield said. “From our perspective, skin colour does constitute reasonable suspicion. That’s the point for us in all of this. That’s why we want police to release the stop and search data, so we can interrogate the data and look at who they are stopping and how they make those decisions.”

In one case Caulfield’s team is working on, a Critical Incident Response Team member crash-tackled an innocent Indian student, breaking his jaw. “Police had been pursuing someone in a car chase and confused him for the person they were searching for and he was thrown with so much force into the pavement his jaw was broken and he lost consciousness,” she said.