Terry D. Montgomery, 53, of Sullivan -- owner of Terry's Collision Center, 1550 North Section Street -- was arrested at 2:32 p.m. by Sullivan City Assistant Police Chief Gary Cooper on two separate warrants.

Montgomery was picked up on a Feb. 7 warrant charging him with one count of insurance fraud -- a class D felony -- and one count of forgery -- a class C felony.

A second warrant issued on Monday -- the result of an insurance sting operation -- charges him with one count of insurance fraud, according to Sullivan County Prosecutor Robert Springer.

Combined bond for Montgomery, a Greene County native and former Linton resident, was set at $25,000 with 10 percent cash allowed.

Montgomery, who formerly operated an auto body shop in Dugger, posted $2,500 cash bond at 3:10 p.m. and will appear in Sullivan Superior Court at 10 a.m. on Feb. 26 for an initial hearing.

The investigation into the case dates back to last October when Palestine, Ill., resident Sarah Bickers dropped off her 2003 Saab at Montgomery's garage in Sullivan to have a transmission replaced.

Bickers told police that a Nationwide Insurance Company representative had inspected the vehicle and determined a replacement transmission was needed. He prepared an estimate, according to an incident/crime report prepared by Officer Cooper.

In a Dec. 20, 2007 letter prepared by Bickers and forwarded to police, Montgomery is alleged to have told Bickers he was ordering a "used transmission." On Oct. 24, the insurance company issued a check in the amount of $2,596.70 that was made payable to Terry's Collision Center and Bickers as co-payees.

The check was allegedly cashed on Oct. 26.

Bickers alleges that Montgomery forged her name on the check.

Montgomery is alleged to have told an insurance representative that he had "power of attorney" on Bickers behalf and was authorized to sign the check, according to an incident/crime report prepared by officer Cooper.

Bickers said in the letter to police that her car was returned to her on Nov. 30, 2007 with a presumed used transmission installed. On Dec. 4, her car started showing the same problems and she contracted her local insurance agent -- Springer Insurance in Sullivan -- and told them the car was not fixed.

Bickers says she also contacted Montgomery and was told that he "must have gotten bad parts." He advised her to bring the car back and he would fix it.

Not satisfied, Bickers told police that she contacted Tim Garrett at Jay's Auto World in Sullivan and asked him to inspect the work that had been done on her car by Montgomery.

Garrett determined that the transmission had not been replaced -- as promised -- and the only work he could see that had been done was a clamp had been placed on a transmission line, according to Bickers.

The insurance company also determined through its own inspection, that no work had been done on the defective transmission. The original undercoat overspray had not been disturbed from bolts on the transmission, according to court documents.

The insurance company was then required to pay out more than $3,000 to have Indy Saab transport Bickers' car to Indianapolis and carry out the transmission replacement.

Montgomery was then the target of a sting operation set up by the insurance company that resulted in the second charge of insurance fraud, according to court records.

The Nationwide Insurance Company crime division directed the "sting operation" at Montgomery's business practices using a special investigator.

"He (the investigator) did a string with the cooperation of local law enforcement," Springer said.

Montgomery is alleged to have conducted repairs to a 2005 Ford F-150 pickup when the parts were not damaged or were pre-existing and not covered under the insurance policy. He is alleged to have overcharged the insurance company by about $1,800 in the case, according to the prosecutor.

Conviction of each class D felony count carries a possible sentence ranging between six months and three years in jail and a fine up to $10,000. The class C felony charge carries a possible sentence between two to eight years in jail and a fine not to exceed $10,000.