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James J. Wrynn    Superintendent of Insurance    25 Beaver Street  New York, N.Y. 10004

ISSUED 3/15/2010 FOR IMMEDIATE RELEASE

OWNER OF CORTLAND COUNTY LANDMARK RESTAURANT ARRESTED

The owner of a Cortland County landmark hotel and restaurant destroyed by fire more than two years ago was arrested Thursday for burning the building so he could collect a $137,000 insurance claim.

George Merchant, 61, was arrested at his home in the Cortland County Town of Cincinnatus by state police. He was being held in lieu of $10,000 bail following an arraignment in the Town of Homer Court.

Merchant was arrested as the result of a joint investigation by the Insurance Department’s Frauds Bureau, state police at Homer and the state Office of Fire Prevention and Control in Montour Falls.

Investigators allege Merchant intentionally set fire to the two-story Brown Beaver restaurant in the Town of Willet, a local gathering place in the southeast corner of Cortland County, about 50 miles south of Syracuse. Fire destroyed the 120-year-old frame building in early morning hours of August 28, 2007. No one was hurt in the fire.

Merchant owned the building for about seven years prior to the fire. The holder of a mortgage on the building was expected to bring foreclosure actions against Merchant two weeks before the fire. Investigators said that Merchant removed NASCAR mementos that he owned and stored in the restaurant two days before the fire. Arson investigators used an accelerant detection canine to uncover evidence at the scene of the fire.

Following the fire, Merchant was paid $137,000 on an insurance claim he filed with his insurer, Penn-Star Insurance Co.

Merchant was charged with third degree arson, second degree insurance fraud, second degree grand larceny, and first degree counts of falsifying business records and reckless endangerment. He could be sentenced to up to 15 years in prison if he is convicted. A hearing will be scheduled in Cortland County Court.

The case is being prosecuted by Assistant District Attorney Veronica Krause.

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