I-Team: Questionable contracts at RI state beaches

Peter Palumbo

The NBC 10 I-Team found the chairman of the state's Democratic Party has the contracts at three Rhode Island state beach concession stands. His friend, a Cranston state representative, is now managing those concession stands after he initially won the bids, but withdrew his proposal shortly thereafter.

The deal has competitors questioning whether any laws were broken, and state police have begun an investigation, which is open and ongoing.

The I-Team received state bid proposals from September that show two connected officials at the top of the bidding process for beach concession stands.

State Rep. Peter Palumbo, D-Cranston, is the manager of the Beachcomber stands at Scarborough, Roger Wheeler and Misquamicut state beaches. Before he became manager, Palumbo won the concession contracts at those three state beaches.

Here's how it works: the winner is one who bids the highest price to run the concessions, essentially leasing the space to a run a for profit business.

Records the I-Team requested show Palumbo bid a combined price of $1,776,655 for a five-year contract with the state on Sept. 5, 2013. The contract was to begin in 2014, but he quickly rescinded the offer.

The I-Team approached Palumbo at the Scarborough North beach location and asked him why he withdrew his winning bid.

"I couldn't get the money up to do them, to operate them. I had gone through some personal financial problems. I miscalculated, did some things like that. I couldn't do it, unfortunately," said Palumbo.

With Palumbo out, the runner up and de-facto winner of the contracts is former state representative and current chairman of the state's Democratic Party, David Caprio.

Caprio is part of a prominent political family. His father is chief municipal judge in Providence and his brother, Frank, is a former state treasurer who is running for that post again.

Caprio's bid came in at $1,550,015 for the three stands, about $226,000 less than Palumbo's bid.{} (See the bids.)

Records from the secretary of state's office show Caprio formed a new company, DAC Caesar, around the same time of the bid proposals.

"David is a friend," answered Palumbo when asked what his relationship is with Caprio.

It's unclear if the chairman has ever run a concession business before. Palumbo has.

He worked the state beach concessions with his former father-in-law.

The I-Team questioned Palumbo whether it was just a coincidence when he withdrew his bids that the runner up was his friend.

"Well, I was lucky that it was because he hired me. He wanted to hire me as a manager. So, I'm very fortunate, that's the fact," said Palumbo.

The details of this bid caught the attention of competing companies.

Pete Trikoulis was one of them.

"I'm disappointed. I'm frustrated, you know. I do feel like they had a plan, have two bids in and one of them would surely win. Next time I could bring 10 different friends and bid on the same place and the odds are I'll win one of them, right?" said Trikoulis.

The bid also caught the eyes of state police detectives.

"We received information about the beach concession contracts, which led us to take a look at them, and we did open an investigation, and we have an open and active investigation into those contracts," said state police Maj. Todd Catlow.

The I-Team reached Caprio by phone, email and text message, and NBC 10 stopped by his Providence law office to try to ask him questions about the bidding process. He did not want to answer any questions on camera or off camera and asked if NBC 10 could send him questions through email.

Questions were sent to Caprio, including whether he and Palumbo pre-planned a bid strategy. Caprio never replied, but he did send a statement via text message.

"I am the sole owner of the concession business. My small business employs over 75 people at three locations, and I have assembled a fantastic team to assist me in operating my business. I attempt to provide good service and product at reasonable prices for the beach visitors," the message said.

The statement does not begin to answer any questions the I-Team had for Caprio because he never agreed to an on-the-record interview.

However, his partner Palumbo was questioned as to the appearance of any impropriety.

"I don't understand why it wouldn't look good. It was the way it was, unfortunately. Maybe it doesn't look good but there's only so many people in this business, so that's it," Palumbo said.