Middletown Business Owner Pleads Guilty To Disability Fraud

MIDDLETOWN, RI—A former Federal Air Marshal employee pleaded guilty in Providence federal court on Tuesday to concealing his employment status from the United States Department of Labor and fraudulently collecting nearly a quarter of a million dollars in Office of Workers' Compensation Programs disability benefits while owning and operating a martial arts business in Middletown.

According to a press release from U.S. Attorney for Rhode Island Aaron Weisman, Joseph Patrick Watterson, 52, of Newport, admitted he initially concealed on his worker compensation forms that he owned a martial arts business, Two Swords Brazilian Jui Jitsu in Middletown.

"Later, after admitting that he was self-employed, he concealed on OWCP forms the true scope of his employment activities at his martial arts studios, because he did not want his OWCP benefits to be reduced or terminated," said the press release.

"Watterson admitted that he concealed the face that he was instructing and engaging in jiu jitsu," said the press release. "Rather than disclose his physical activities at his martial arts studio, Patterson falsely represented that his role was merely administrative. In a letter to DOL, Patterson described his duties as involving 'cleaning and maintaining school, share the bookkeeping'."

According to the government's evidence, Patterson collected disability benefits totaling approximately $241,118.52 from May 31, 2016 to March 3, 2019 that he was not entitled to collect. He pleaded guilty to making false statements to obtain federal workers' compensation benefits and is scheduled to be sentenced on January 28. He could face penalties of up to 5 years imprisonment, a fine of $250,000, and a term of supervised release of 3 years.

Patterson's case was investigated by the Transportation Security Administration and the U.S. Postal Inspection Service and is being prosecuted by Assistant U.S. Attorney Ly T. Chin.