NBC 10 I-Team: Former RI lawmaker accused of stealing from campaign fund

Former state Rep. Peter Palumbo of Cranston was arrested Thursday morning by Rhode Island State Police and arraigned in District Court on charges of embezzlement and filing a false document with a public official.

The former representative appeared in court to face charges related to campaign finance discrepancies. Specifically, a Rhode Island Board of Elections audit revealed that Palumbo did not accurately report $59,975 in cash withdrawals from his campaign funds.

Investigators dug in further, finding withdrawals of $16,498 from ATMs at seven different casinos around the country over five years.

“He could not expenditure any of these reports,” said Maj. Dennis Fleming, detective commander of the state police.

Court records show the former representative allegedly withdrew the money from the “Friends of Peter Palumbo” account at ATMs located at Twin River, Newport Grand, Foxwoods, Mohegan Sun, Saratoga Horse Racing, Casino Arizona and Seminole Hard Rock Casino from 2010 to 2014.

Palumbo had “no comment” when leaving the courthouse on $5,000 personal recognizance. His attorney is former Rep. Peter Petrarca, who coincidentally is having a busy week, after representing former lawmaker John Carnevale on perjury charges.

In September, the state Board of Elections sent a package of information about Palumbo to the Office of the Rhode Island Attorney General. That's when the financial crimes unit, with help from the attorney general, stepped in to investigate the BOE's audit.

Documents obtained by the NBC 10 I-Team at the time indicated that the director of campaign finance had suspicions about Palumbo's records, and subpoenaed records from Citizens Bank in 2015.

Palumbo was ousted as a lawmaker in 2014, but was still required to maintain accurate records. An affidavit said he provided a false document to the board of elections in December of 2014 by listing his campaign account balance as $13,134, when it was actually $263.

Palumbo is no stranger to law enforcement or the NBC 10 I-Team.

Back in 2014, the I-Team first exposed a suspicious deal when Palumbo was the winning bidder for a state beach concession contract while serving as a Cranston state rep. He backed out, and his friend David Caprio, stepped in. He was the state's democratic party chairman. Caprio resigned one day after the NBC 10 I-Team broke news of a state police investigation. Caprio still holds that beach contract. The I-Team had reported the US Attorney’s office reviewed the case. According to state police, the beach concession investigation is still open.

Palumbo is also in the middle of a state Ethics Commission investigation. The commission has scheduled a Feb. 7 public hearing on a complaint related to the contract, filed by Common Cause RI.

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