Monser Bros. Tire Sales co-owner Jeffrey Gelbsman, 38, was arrested Tuesday by investigators from the state Insurance Fraud Bureau working in conjunction with the Otsego County District Attorney’s Office.

Gelbsman was charged with second-degree insurance fraud and third-degree arson, class C felonies, in connection with an Aug. 16, 2002, fire that destroyed the former Wall Street site of the tire shop he owns with his father.

The relocation and expansion of the tire shop was funded with $480,000 in insurance money paid for the original building and its contents by Selective Insurance, according to state officials.

A statement from an insurance adjuster for Selective Insurance on file at Oneonta Town Court, where Gelbsman was arraigned Tuesday, indicates 200 to 300 tires in the basement of the original shop were valued at $17,000.

"I determined these tires to be a total loss and offered them to a salvage company, but they refused to take them due to the liability of tires that had been in a fire," Gary C. Jakubowski said in his Mar. 23 statement to insurance-fraud investigators. "I told Jeff Gelbsman that he should have the tires inspected by an independent expert to find if they were safe to reuse. He did not contact me to advise me if the tires were reusable, so they remained a total loss."

But a former Monser Bros. employee told state investigators that the tire shop sold 300 Michelin tires that had been in the basement of the original store.

"We cleaned the tires off and put them in storage," Shannon T. Hutzel said in an Apr. 7 statement also on file with the court. "These tires were later sold for retail at the new Monser’s garage located at 375 Chestnut St. in the town of Oneonta."

Gelbsman did not return a message left on his answering machine Wednesday, and a Monser Bros. employee said Glebsman was not at the business. He said Hutzel had not worked at the business for three years.

Gelbsman’s attorney, Richard Rothermel, did not return messages left at his home and office.

State officials offered no indication that the tires allegedly sold were unsafe of if there was, at this point, any way consumers could be compensated for purchases if they had experienced quality problems.

Michael Barry, director of public affairs at the state Insurance Department, said concerned Monser Bros. customers could contact the state Consumer Protection Board or the Better Business Bureau.

Barry said his agency only deals with insurance-related issues.

No additional information is being released on how investigators think Gelbsman may have started the blaze or on what evidence led investigators to make this week’s arrest.

"The investigation is still ongoing. We can’t comment beyond what was in yesterday’s press release," Barry said.

A statement was also filed with the court from a man who lived near the original site of Monser Bros. at around the time of the suspected arson.

Jumal D. Flow told investigators in 2003 that he saw Gelbsman inside the garage door at the tire shop at 8:55 p.m. on the night of the fire. The blaze was reported at 10:40 p.m.

A report from state fire investigators included in the court documents indicated the original suspected cause, a battery booster box, had undergone testing by independent company JDR Systems.

"The unit was found not to be the ignition source of this fire," the report states.

The report concluded that the fire was caused by "incendiary" means.

In her statement, Hutzel also said items not actually at the fire scene were placed on an inventory for the insurance claim, while employees were allegedly not compensated for their personal losses.

"In addition, there are numerous tires and other items on the inventory that I know were not kept inside Monsers on Aug. 16," Hutzel said. "Some mechanics lost thousands of dollars worth of tools. I never received any compensation for my personal property and never saw any other employee receive compensation."

Gelbsman was released from the Otsego County Jail on $15,000 bail shortly after his arrest and is to reappear in Oneonta Town Court on Apr. 27.

Monser Bros. became an Empire Zone-certified business after it moved to the West End, which means it is eligible for special tax breaks from the state.