PROVIDENCE, R.I. (WPRI) — The Rhode Island Ethics Commission fined former State Rep. Peter Palumbo for his bid on a state beach concession contract that has also prompted a federal investigation that remains open.

“We’re going to appeal this,” Palumbo said, referring to the $1,000 fine. “We’re going to talk about an appeal.”

Palumbo won the 2013 beach concession contract, agreeing to pay the state $1.7 million. But he stepped aside, allowing the deal to go to former Democratic Party Chairman David Caprio, who then hired Palumbo to run the concessions.

Caprio stepped down as the party leader a short time after the concession controversy was revealed, saying he “could not dedicate the necessary time and energy” to the position.

Palumbo had the contract with the state from 2000 to 2008, before a law was passed making it illegal for General Assembly members to be independent contractors with the state.

But Palumbo’s attorney, Terry Livingston, who’s also the longtime legal counsel to the General Assembly, argued Tuesday that the code of ethics did not apply to Palumbo’s bid because he would’ve been paying the state.

And two commission members agreed with him that the term “independent contractor” is not clearly defined in the code.

“They were not paying Peter Palumbo one penny,” Livingston said. “This commission got this wrong. This was a lessee-lessor relationship. He was not an independent contractor.”

Livingston bristled at the implication that Palumbo has an advantage on bidding for a state contract while he was a representative.

“I disagree,” he said. “A member of the General Assembly has no advantage over anyone else on these type of bid contracts.”

The complaint was filed in 2014 by Common Cause Executive Director John Marion.

“It took two years,” Marion said. “But we’re please with the decision. We need laws as we know in Rhode Island specifically for the assembly because we’ve have this long history of misbehavior.”

Marion agreed that the definition of independent contractor could be more clearly defined in the code, pointing out that the commission has the power to amend it if they choose.

In an unrelated case, Palumbo faces filing a false document and embezzlement charges for allegedly misusing about $59,000 from his campaign account. Rhode Island State Police said records showed Palumbo withdrew about $16,000 from ATMs at seven different casinos around the country.

Palumbo was arrested by Rhode Island State Police last month and later released on $5,000 personal recognizance. A pre-arraignment conference on the case is scheduled for April 12.Send tips to Target 12 Investigator Walt Buteau at and follow him on Twitter@wbuteau.